AUD GBP Weaker After Unemployment Rate Soars

AUD GBP Higher Despite Higher UK GDP Number

The AUDGBP exchange rate was lower by -0.14% after the unemployment rate unexpectedly rose to 5.2%. Analysts were expecting a move higher to 4.8% from 4.6% but the latest figures show the depth of the damage that is caused by the lockdown strategy. The Australian dollar has been helped by the fact that UK growth came in lower at 1.2% with analysts expecting a reading of 1.5% for the recent quarter.

The AUD to GBP exchange trades at 0.5450 but has found support there in recent days.

Australian unemployment rate soars after lockdown

The Australian jobs market produced dismal figures with the country facing another uphill battle to recover from the government lockdown damage.

The Australian unemployment rate was higher at 5.2% despite expectations of a 4.8% number. Alongside the -46k jobs lost it was a blow for Aussie bulls. The market had expected the economy to add 50k jobs despite the recent lockdown.

Forcing the jobless rate higher was an increase in some states of the number of people looking for work, with the so-called participation rate rising from 64.5% in September to 64.7% last month.

The country’s treasurer and the Prime Minister had cheered 13-yr highs in job advertising only a day earlier and will be feeling less bullish today. The country faces problems with job vacancies after closing its borders for the whole of the pandemic.

“In contrast, while Victoria’s unemployment also increased, by 29,000 people, employment fell by a further 50,000, with their participation rate falling by 0.4 percentage points,” Bjorn Jarvis, head of labour statistics at the ABS, said, saying that the workforce also remained 113,000 lower than in May.

“It may seem counterintuitive for unemployment to rise as conditions are about to improve,” Jarvis said. “However, this shows how unusual lockdowns are, compared with other economic shocks, in how they limit being able to work and look for work.”

UK economy sees slower growth but inches towards pre-pandemic output

The UK economy is close to recovering its pre-pandemic levels of output despite slower growth this quarter.

Official figures showed the economy growing at 1.3% between July and September. That was lower than expected and well behind the 5.5% spurt enjoyed in the second quarter as the nation bounced out of lockdown.

But the 0.6% growth in September was better than forecast, offering hope that October and November will also be strong. The UK is now on track to see growth where it was prior to the pandemic at the end of 2019.

Supply chain bottlenecks have been blamed for much of the weakness with car sales weighed by chip shortages and builders struggling to find construction materials, while retailers have also seen a tough environment.

Growth in the UK’s dominant services sector – representing four-fifths of output – was limited by weak consumer spending after successive months of decline in retail sales.

Chancellor Rishi Sunak said:

“The economy continues to recover from Covid and thanks to schemes like furlough, the unemployment rate has fallen for eight months in a row, and we’re forecast to have the fastest growth in the G7 this year.”