GBP: UK eleven-year low unemployment doesn’t paint the full picture

Yesterday morning’s focus was on employment data in the UK. The claimant count i.e. the number of people claiming unemployment benefits increased by 9,800, the biggest rise since May. In contrast, UK unemployment fell by 37,000 to 1.6 million (4.8%) in the three months to September, hitting an 11-year low. Considering the increase in claimants it is hard to see how the unemployment rate can drop, this is mainly due to how it is measured. As British Prime Minister Benjamin Disraeli once said’ “There are three kinds of lies: lies, damned lies, and statistics.”

The Bank of England (BoE) has forecasted that unemployment is set to rise amid uncertainty over Brexit. In terms of unemployment data, it will focus more on the claimant count as this is more forward-looking that the previous three months for unemployment

According to the Office for National Statistics (ONS), ‘there are signs that the labour market might be cooling, with employment growth slowing’. This was further backed up from The British Chambers of Commerce (BCC), which said that Brexit is ‘dampening firms’ recruitment intentions’, putting ‘increased pressure on UK employment levels’.

Next week UK Chancellor Philip Hammond is due to make his inaugural Autumn Statement. It will be interesting to see what measures he will introduce to support the labour force.

The final big figure of the week from the UK is set for release today. The highly-watched retail sales number is set to show that retail sales have bounced back from last week’s flat number. Any surprises could cause sterling movement.