UK jobless claims showed a drop of 8.6 thousands to 1.51 million, compared to estimates of 5.0 thousands drop, while the previous reading of -7.3 thousands was revised to -11.8 thousands. Claimant count rate lingered at 4.5%. ILO unemployment rate for the three months ended April remained at 7.8%, the fastest pace in more than a year, yet it recorded a drop of 5,000 to 2.51 million, from both prior and expected readings of 7.9%. Employment edged up 24,000.
The British economy managed to avoid a triple-dip recession after recording an expansion of 0.3% in the first quarter, following a 0.3% drop in the last three months of 2012. The data released recently has showed further signs the economy may be on the right track of recovery and there is no need to bolster stimulus, where manufacturing and construction sectors showed a widening expansion in May. Today’s showed an improvement in consumer spending as average weekly earnings surged 1.3% in the quarter through April from a year earlier after the revised of 0.6% increase.
However, BOE policymaker Paul Fisher said on Wednesday that Britain will need more time to reach recovery as it lags behind the United States which is currently thinking of scaling back stimulus after the recent improvement. Fisher revealed that the recent volatility in markets have signaled that UK recovery is still like one or two years behind the United States. Policymakers at the BOE opted to leave both interest rate and APF size on hold for another month in June on signs of progress that appeared following a better-than-expected first-quarter growth figures and FLS extension. Minutes of May`s monetary decision showed a split among policymakers regarding stimulus as Mervyn King, Paul Fisher and David Miles resumed their call for adding an extra 25 billion pounds to QE while the majority preferred a hold.
GBP jumps from $1.5656 to $1.5681.