Rise in figures of employment and nominal wage growth in March 2018 Labour Market report boosts investors’ confidence in Sterling.
As the Office for National Statistics released its March 2018 Labour Market report, showing that the labour market is sustaining stable growth, investors felt more confident about Sterling.
Key points of the report:
- The employment rate was 75.3%, which is higher than a year before (74.6%) and the highest since 1971.
- The unemployment rate was 4.3%, down from 4.7% for a year earlier and the lowest since 1975.
- Although in real terms average weekly earnings for employees in Great Britain fell by 0.2% excluding bonuses, average nominal weekly earnings (not adjusted for price inflation) increased by 2.6% excluding bonuses, and by 2.8% including bonuses, compared with a year earlier.
The average wage growth forecast was at 2.7%; the actual result of 2.6% showed that wages are catching up with consumer inflation that came down to 2.7% from the 3.0% the previous month and balancing out the decline in real wage growth.
On this positive note the Pound rose against major currencies on Wednesday: 0.45% higher against the Dollar and 0.18% higher against the Euro.
“January’s labour market figures provided clearer signs of a revival in earnings growth, suggesting that it won’t be long before we start to see sustained rises in real pay. Overall, today’s figures add further weight to our view that the next interest rate hike will occur in May.”
Ruth Gregory, a UK economist at Capital Economics.
There are also expectations of positive figures on government borrowing, which should boost the Pound even further.