UK: Unemployment rate likely to hold at 4.9% - RBC CM

Sue Trinh, Senior Currency Strategist at RBC Capital Markets, suggests that for the month of August, RBC sees UK pay growth essentially going sideways, with the including-bonuses measure of average earnings holding at 2.3% 3m/y and the ex-bonus measure dipping marginally to 2.0% 3m/y from 2.1% 3m/y.

Key Quotes

“With import prices on the rise and average earnings growth rates flat-lining, a purchasing power squeeze is on the horizon. On balance, we look for the unemployment rate to hold at 4.9%, but the risk to that view is skewed toward a drop to 4.8% rather than a rise to 5.0%. This should be consistent with more employment gains, but those gains could be somewhat south of the recent 170–180k pace for three-month employment growth.”