The latest UK employment report was mostly better than expected, with the economy losing just 8.9K jobs in April versus an estimated decline of 13.9K jobs.
In addition, previous readings enjoyed notable improvements, reflecting flexibility in the labor market and strong wage inflation.
- Change in the number of claimants in April: 8.9 thousand (13.9 thousand expected)
- The change in the number of claimants for March was revised favorably from initial losses of 10.9K to a gain of 2.4K in employment.
- March unemployment rate: 4.3% (4.3% expected, 4.2% previous)
- Average income index for the three-month period ending March: 5.7% (5.3% expected)
- The average income index for the three-month period ending in February rose from 5.6% to 5.7%.
Link to the UK labor market overview for April 2024
However, market participants appear to be focusing on the decline in job openings, indicating a slowing job market. Employment openings fell by 26,000 between February and April, which translates into a higher ratio of unemployed people per vacancy at 1.6 versus a level of 1.4 in the previous quarter.
According to the Office of National Statistics, “Although this ratio is still low by historical standards, it shows a slight decline in the labor market, with declining job openings combined with rising unemployment rates.”
Market reactions
British pound against major currencies: 5 minutes
Overlay of GBP against major currencies: 5 minutes Chart by TradingView
GBP pairs were trading in tight ranges ahead of the jobs numbers, before rising slightly after seeing key numbers come in the green.
However, the British pound did not make much progress against its counterparts before bearish pressure took hold and pulled the currency lower across the board over the next two hours.
Dovish statements from Bank of England Monetary Policy Committee member Bill, indicating the possibility of a rate cut in the summer, likely contributed to the pound's losses, leading to its biggest declines against the New Zealand dollar and the franc, the latter of which recorded a price index figure. Producers are stronger than expected.
However, the British pound was able to gradually recover its losses as the session continued and traders are likely to adjust their positions ahead of the US PPI report.
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