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James Smith, Developed Markets Economist at ING, suggests that it’s fair to say that the latest UK jobs report is a bit of a mixed bag as wage growth – a key part of the Bank of England’s rationale for hiking rates this month – slipped back further to 2.7% from a revised 2.8% May figure.

Key Quotes

“At the same time, the 3M/3M of employment growth slipped sharply to a 42k from 137k previously.”

“Importantly though, a large chunk of all of this was related to base effects. The fall in employment was amplified by a particularly strong March figure dropping out of the moving average. In fact, a more rapid fall in unemployment means the jobless rate is now at another post-crisis low of 4.0%.”

“If you look at all of this, the recent momentum has actually been reasonable – albeit a little slower than it was around the turn of the year – so we doubt Bank of England policymakers will be overly worried for now.”

“But when considering the timing of the next rate hike, we think it’s what happens to growth that really counts. While the sunny weather gave the high street a much-needed boost in the second quarter, we suspect that cracks could begin to reappear over coming months.”