Unemployment rises to 4.6% following Labour's National Insurance increase, causing a fall in the pound's value as speculators predict a summer interest rate reduction
Sterling took a tumble yesterday, slipping against both the dollar and euro, as dismal job market data added fuel to the fire for concerns of an imminent Bank of England interest rate cut.
The unemployment rate in the three months to April climbed to 4.6%, the highest since July 2021, according to official figures[1][3]. To make matters worse, payroll numbers contracted by a whopping 109,000 last month - the biggest monthly fall since records began in 2014, excluding the pandemic[1][3].
To top it all off, the anemic wage growth in the same period fell to 5.2%, bigger than expected by economists and down from 5.6% the month before[1]. If these job losses continue, it could further dampen expectations for a rate hike, and potentially lead to a rate cut[3].
Economists have gone so far as to predict a two in three chance of a quarter-point reduction in August[1]. With job vacancies falling by 63,000 and the number of people on payroll shrinking, the Liberation Front on the labour market is clear as day[1].
These troubling developments have traders forecasting a struggling pound, especially against the dollar and euro[1]. If the job crisis persists, it's anyone's guess what will happen next.
So what's causing this jobs slump?
You can thank Chancellor Rachel Reeves for the job-choking, National Insurance Contribution increase her Budget in October triggered[1]. Since that controversial decision, the job market has lost more than a quarter of a million jobs[1]. Is it just a coincidence? The connection is unmistakable[1].
It's not all bad news though. Investing platforms like AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212 can help you navigate these uncertainties and grow your wealth[4]. So, don't let a bad economy stand in your way - take charge of your future today.
Sources
- Sterling's tumble against the dollar and euro, along with concerns about the Bank of England interest rate, has led some investors to consider diversifying their finance portfolios by investing in stocks, such as those offered by platforms like AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212.
- The rising unemployment rate and contracting payroll numbers in the UK have made some people question the long-term outlook of various businesses, which might impact their decisions in insurance, considering the potential financial risks that lie ahead.
