More broadly, it also adds to the mix for those trying to decide on the size of their UK weightings in their portfolios for the second half of 2015 and into next year.
“This morning’s labour market report had a noticeably soft tone to it,” said Investec’s Philip Shaw. “In particular, the unemployment rate edged up to 5.6% in the three months to May from 5.5% in April the number of jobless rose by 15k, the first such increase since early-2013; and employment fell by 67k.”
“Evidence of stronger pay growth was maintained, but although May’s weekly earnings figures firmed to 3.2% from 2.7%, this fell a little short of consensus estimates of 3.3%. Private sector pay growth excluding bonuses ticked up to 3.3% from 3.2%,” Shaw added.
“The other figure that has been closely followed is the level of wage growth, which also disappointed, rising by 2.8% over the last three months (annualised) vs. the forecast of 2.9%,” said Helal Miah, investment research analyst at The Share Centre.
“While these numbers on a stand-alone basis should not be any cause for concern, it will make policy makers think again – raising interest rates too soon could stall the economic recovery, Miah added. “Yesterday’s flat inflation data should also make policy makers less inclined to pull the interest rate trigger too soon despite Mark Carney’s comments that interest rate hikes are looming.”
