The AUD GBP exchange rate was lower by over 0.60% after the latest UK employment report showed jobs were slightly higher than pre-virus levels. British employers added a record 241,000 staff last month, with the number of vacancies also reaching a record above 1 million as staff shortages continue to bite.
The AUD to GBP exchange rate trades at 0.5285 and the Australian economy will share its own jobs data tomorrow, which is likely to show negative trends.
UK employment figures reach pre-virus levels
Britain’s government got a boost as it prepares to end the furlough programme on September 30th with UK employers adding a record number of employees to the books. The latest data from the ONS showed that 240,000 workers were added to payrolls which was a monthly record.
Tuesday’s figures also provided traders with an improvement from some weaker economic data lately as the reopening bounce started to fizzle out.
Businesses also reported more than 1 million vacancies for the three months to August, which is another record, while the unemployment fell slightly to 4.6% as expected. Australia’s jobs report tomorrow is expected to show the opposite trend with a move from 4.6% to 4.9% as the current lockdowns have decimated the Australian recovery.
“Today’s statistics show that our plan for jobs is working,” finance minister Rishi Sunak said.
“The latest data brought more signs that labour market slack is declining fast and that labour shortages are contributing to faster underlying pay growth,” said an economist at Capital Economics.
During the three months to July, the number of people in employment, rose by 183,000 with 178,000 expected by analysts.
Lowe confident on the Aussie economy after lockdowns
Reserve Bank of Australia chief Philip Lowe said the coronavirus lockdowns would cause a sharp contraction in the economy this quarter but was confident of a rebound once restrictions were eased in the December quarter.
Governor Lowe also insisted that interest rates were not going to rise from their record lows until 2024 because of the sluggish growth of wages.
Lowe also took issue with the market expectations for rate hikes in late 2022 and 2023.
“These expectations are difficult to reconcile with the picture I just outlined, and I find it difficult to understand why rate rises are being priced in next year or early 2023,” Lowe said.
Lowe accepted that the lockdowns across Sydney, Melbourne and Canberra would likely see the economy’s growth drop by at least 2% in the September quarter, and possibly by much more. Unemployment was also expected to reach the “high fives” for a short period with the jump to 4.9% expected tomorrow.
“This is a major setback, but it is likely to be only temporary,” said Lowe. “We expect the economy to be growing again in the December quarter, with the recovery continuing into 2022.”
The optimism is based on an increase in vaccinations and hopes that it will allow the economy to reopen in December.