LONDON — The pound is dipping on Wednesday after the latest data on the UK’s labour market was released earlier in the morning.
According to the Office for National Statistics, headline employment rose to 74.6%, while headline unemployment was unchanged at 4.8%. However, what spooked the markets was the lower than expected wage growth recorded. Averages weekly earnings grew just 2.6%, against an expected 2.8% and a reading of 2.7% in January.
Sterling slipped on that news, moving from virtually flat on the day, to a fall of roughly 0.4% against the dollar. Just before 11.00 a.m. GMT, it remains subdued and is down 0.34% to trade at $US1.2431.
Here is the chart:
Writing after the release, Samuel Tombs of Pantheon Macroeconomics said in an emailed research note:
“The renewed weakening of wage growth in December is another sign that the U.K.’s period of strong, consumer-led growth is about to draw to a close. Year-over-year growth in average weekly wages fell to just 1.9% in December — the lowest rate since February — from 2.9% in November. Admittedly, the weakness was concentrated in the financial and business services sector, where wages were 0.3% lower than in December 2015.”
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