UK Earnings Ease in August, Sterling Heads Lower

UK Average Earnings Moderate Slightly in August

The UK’s Office for National Statistics released earnings data for the month of August, revealing lower than anticipated numbers. Three-month average earnings, a data point closely watched by the Bank of England as it can contribute to elevated prices and a wage price spiral, eased more than anticipated from 8.5% in July to 8.1% in August. The forecast estimated 8.3% for the month.

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The data was released ahead of the delayed unemployment data, which is now scheduled for October 24th.

Source: ONS on X

UK unemployment data has started to trend lower in recent months, arresting concerns that a tight job market combined with rising earnings will entrench inflation expectations. In fact, UK unemployment has increased to 4.3% in July from 3.5% in August 2022 and we will find out next week if the upward trend is set to continue. The IMF’s World Economic Outlook report this month noted a sharper contraction in UK GDP for 2024 which is likely to see further job losses along the way as financial conditions are expected to remain restrictive.

Source: DailyFX economic calendar

GBP/USD 5-Minute Chart

Source: TradingView, prepared by Richard Snow

— Written by Richard Snow for DailyFX.com

Contact and follow Richard on Twitter: @RichardSnowFX