UK employment hits record high despite disappointing jobs report

UK jobs numbers failed to meet market expectations, yet with employment, unemployment, and wage growth impressive by historical standards, the jobs market remains one strong point for the UK economy.

• Prospect of further US-China trade talks fail to inspire European stocks

• UK jobs report undershoots expectations, yet employment rate hits record high

• Both German and eurozone ZEW surveys show welcome improvement

Global markets have failed to gain any traction today, as news of further US-China trade talks failed to inspire stocks both in Asia and Europe. Marginal losses in China alluded to a growing disillusionment over the failure to make any significant breakthrough despite a ramp up in discussions. However, with the top US and Chinese negotiators lined up to meet once again on Thursday, there is still some hope that we will find a positive conclusion to avert the reintroduction of 25% tariffs in less than two-weeks.

The pound has come under pressure off the back of a disappointing set of jobs figures for January, with GBPUSD seeking to reverse some of the gains seen in early trade this morning. While the overall employment rate hit a record high of 75.8%, we have seen a fall in average earnings, alongside a ramp up in those claiming unemployment related benefits. However, while wage growth and claimant figures fell short of estimates, it is worth putting this in some context, with unemployment at the lowest level since 1975 and average earnings growth the highest since 2010. For all the weakness evident throughout the latest PMI and growth figures, the jobs market remains buoyant in a historical
context.

The ZEW economic sentiment surveys provided some moderate relief amid a wider period of slowing data points throughout the eurozone, with both German and eurozone figures showing signs of further improvements. While a pessimistic tone remains well established (<0), the rise in both figures point towards a tentative recovery in play here.

Ahead of the open we expect the Dow Jones to open 36 points lower, at 25,847.