Tomorrow AM the UK releases the minutes of this month’s MPC meeting as well as this month’s employment data see our econ group’s preview below
UK BoE minutes (3-4 Aug meeting) 09:30 BST / 04:30 EST
The projections in August’s Inflation Report struck a distinctly dovish tone, with inflation on a two-year horizon seen as marginally weaker than it was in May despite it being conditioned on a much lower profile for market interest rates. Therefore, it appears that increased discussion surrounding downside risks are (to some extent at least) being reflected in the central projection ofthe committee itself and not just the skew of risks. This suggests the voting pattern may have evened out in August, with either one more member voting for further asset purchases, or one of the two hawks dropping his vote for an immediate rate increase. We see the latter as the more probable option, with Spencer Dale the most likely to have dropped his vote for a rate hike. Therefore, we expect the minutes of August’s meeting to show 1-7-1 split, with Adam Posen the lone advocate of more asset purchases and Martin Weale now the sole advocate of a 25bp hike in bank rate.
UK Unemployment (Jun/Jul) 09:30 BST / 4:30 EST
Recently, the claimant count measure of unemployment has painted a much weaker picture of the UK labour market than the broader ILO unemployment rate. Speculation has put this down to changes in the benefit structure for singleparents. However, recent data suggest a more fundamental slowdown in private-sector hiring has been the main cause. Flows out of the claimant count have fallen to levels not seen since early 2009, while vacancies have eased back.As a result, we expect a further increase in claimant count unemployment of 18.9k in July, which could see the unemployment rate on this measure tick upfrom 4.7% to 4.8%. The ILO unemployment rate could edge up to 7.8% from 7.7%.Average earnings growth had stayed low partly because of a shift from permanent to part-time and temporary working. However, recent figures show increases in employment had been focussed on permanent jobs, and average earnings growthhas crept up slightly. We expect this trend to continue, and see growth of average weekly earnings rising from 2.3% to 2.5%. Regular pay growth is seen increasing from 2.1% to 2.3%.
Last Median Forecast
Claimant count (Jul)
Change (‘000s) 24.5 20.0 18.9
Rate 4.7% 4.7% 4.8%
ILO rate (Jun) 7.7% 7.7% 7.8%
Average earnings (Jun)3m-on-yr 2.3% 2.3% 2.5%
Average earnings exbonus (Jun)3m-on-yr 2.1% 2.3% 2.3%
HSBC Global Research