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.

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.