The Pound sterling moved for about 0.3 percent to its highest level on 1.3882 to the US Dollar. That was happened on yesterday trading. There is an update from the UK employment data. 

It showed the further recovery so that the payroll comes back to the pre-pandemic level. The salary growth is also giving a sign about the more basic inflation pressure. 

The UK Office for National Statistics (ONS) reported that the economy created 183k jobs over the three-month period to July 2021. This achievement is twice from the data before. 

It is especially after the addition much as 95k jobs in the June period. Meanwhile, the outperforming market expectations was only 178k, so that it was a good progress. 

The Unemployment Level Declines

The unemployment rate fell from 4.7% to 4.6% in July. Furthermore, the average income plus bonuses increased 8.3 percent, or once again outperformed the expectations. 

This kind of pay growth has the potential to boost inflation more fundamentally and support expectations of a bank of England (BoE) rate hike. There is one more thing to note. 

The number of employees enrolled in payroll increased to a total of 29.1 million in August 2021. It shows the same level as the February 2020 period or a year ag

Meanwhile, the number of job openings in the June-August period set a new record of 1,034,000. This increase happens on the almost all of the industry sectors. 

Several Weaknesses are still found

The rising industry sectors are on the food service and accommodation. However, the United Kingdom employment data for this time is not 100% perfect. What is the reason? 

Total working hours are still below the pre-pandemic levels. Levels of inactivity are also above those pre-pandemic levels, as many employees are still on unpaid leave with government subsidy supplements. 

A number of these weaknesses could result in a correction in the UK labour market, or even a rise in the unemployment rate in the periods after the government revokes related subsidies.

Meanwhile, the Australian dollar was having a bad record in the Asian forex trading session yesterday. The AUD/USD pair felt down by more than 0 4% based on the data. 

The Dark Prediction made by Phillip Lowe

The AUD/NZD was also slipped by 0.3%. The market participants were dissapointed by the dark prediction made by Phillip Lowe as the Governor of RBA. 

Philip Lowe said that he wanted to see the inflation rate hold sustainably in the 2-3 percent range before raising interest rates. For that aim, the salaries must increase significantly. 

However, the Delta variant has scuttled the Australian labor market recovery process, so the chance for a new rate hike will emerge in 2024. That is the biggest possibility.

He predicted that the employees working hours are decreasing by 3 – 4% in the September quarter. It is especially in the areas which set the tightest Lockdown and restriction 

Lowe’s Speech is Highlighted 

This poses the risk of an increase in the unemployment rate in the short term. Pay growth is also likely to be depressed, both in the states of New South Wales and Victoria.

That was happeendnin particular and on a national scale. This assessment reverse the interest rate increase path which was signed by the market calculation. The OIS curve showed it. 

This curve shows 25 point basis for the interest rate at the end of 2022, 69 point basis at the end of 2023, and close to 100 at the end of 2024. Unfortunately, these expectations are hard to be matched. 

The speech by Lowe is now highlighted because it shows the sign that the central Bank of Australia will prioritize the salary growth than the inflation level for their decision making.