UK Unemployment Rate Falls to 4.2% in August

Highlights

• The UK unemployment rate eased to 4.2% in August.
• Wage growth remained elevated despite softening to 8.1%.
• UK private sector PMIs for October are up next.

UK Unemployment Falls to 4.2%

The UK unemployment rate declined from 4.3% to 4.2% in August, with employment falling by 82k in July.

According to the Office for National Statistics,

• The UK employment rate declined by 0.3 percentage points (pp) to 75.7% quarter-on-quarter in the three months to August 2023.
• Economic inactivity rose by 0.1 pp to 20.9%.
• In the July to September 2023 period, job vacancies declined by 43,000 to 988,000. Significantly, job vacancies fell for the fifteenth consecutive month.
• Wage growth including bonuses rose by 8.1% in August.

The latest employment figures are experimental figures. Wage growth figures and the unemployment rate were noteworthy. While softer, wage growth remained elevated. The lower unemployment rate may also raise eyebrows.

GBP/USD Reaction to the UK Labor Market Overview Report

Before the economic indicators, the GBP/USD fell to a low of $1.22327 before rising to a high of $1.22737.

However, in response to the labor market numbers, the GBP/USD fell to a low of $1.22619 before rising to a high of $1.22769.

This morning, the GBP/USD was up 0.22% to $1.22751.

Up Next: Private Sector PMIs

UK private sector PMIs will also be in focus on Tuesday. The services sector, accounting for over 70% of the UK economy, will likely draw more investor interest.

Economists forecast the S&P Global/CPIS Services PMI to hold steady at 49.3 in October.

Later in the session, US private sector PMIs may impact market risk sentiment. Economists forecast the US S&P Global Services PMI to fall from 50.1 to 49.8,

Beyond the economic calendar, US corporate earnings will influence market risk sentiment. Coca-Cola (KO), General Electric (GE), General Motors (GM), Microsoft (MSFT), Alphabet (GOOGL), and Visa (V) are among the big names releasing earnings.