12 June 2024
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UK labour market cools

Daily Outlook - June 12 2024

By Edward Bell

The unemployment rate in the UK rose to 4.4% in the three months ending April, up from 4.3% in the prior three-month period. Unemployment hit the highest level since Q3 2021 and has been trending higher since the start of the year. Employees on payrolls dropped by 3k in May while total employment in the three months to April fell by almost 140k, more than markets had been expecting. Weekly earning ex-bonuses were steady at 6%. Wage growth has been relatively robust this year even as inflation in the UK has been cooling, helping to lift real incomes. However, the overall tenor of the report from the UK was soft. The persistent strength in wages will keep the Bank of England attentive to the risks of inflation flaring up again and the prospect of a rate cut at next week’s MPC meeting looks remote.

China’s bout of weak inflation continued in May with CPI inflation rising by just 0.3% y/y, holding where it printed in April and underperforming market expectations. Consumer prices are being supported by higher administered prices—utilities and public transport—more than consumption according to press reports. Elsewhere producer prices declined by 1.4% y/y in May, moderating their decline of 2.5% recorded for April but extending their deflationary slide for a 20th consecutive month.

Today’s Economic Data and Events

  • 10:00 UK industrial production m/m Apr: forecast -0.1%
  • 16:00 IN CPI y/y May: forecast 4.85%
  • 16:30 US CPI m/m May: forecast 0.1%
  • 16:30 US CPI y/y May: forecast 3.4%
  • 22:00 US FOMC rate decision upper bound: forecast 5.5%

Fixed Income

  • US Treasuries were helped by a successful 10yr auction. Yields on the 2yr UST fell almost 5bps to 4.834% while the 10yr yield fell by 6bps to 4.04%. Markets will be in a holding pattern until the release of CPI data and the Fed’s statement later tonight.
  • Moody’s affirmed their ‘Baa3’ rating on Tabreed with a stable outlook. Elsewhere, Fitch upgraded Taqa to ‘AA’ with a stable outlook and also upgraded its rating on Apicorp to ‘AA+’ with a stable outlook.


  • The US dollar continued to push higher, mainly at the expense of the Euro though the pace of sell-off in the single currency is cooling. EURUSD closed lower by 0.2% to 1.0741 overnight while GBPUSD managed to tick higher at 1.274 as the UK labour market data didn’t give a strong signal to support the Bank of England cutting or holding rates. USDJPY rose by less than 0.1% to 157.13.
  • In commodity currencies trading was relatively quiet. USDCAD was unchanged at 1.3758 while AUDUSD was a touch lower at 0.6606 and NZDUSD managed to increase by 0.3% to 0.6144.


  • Global equity markets had a mixed close overnight. In the US the Dow Jones fell by 0.3% but was offset by gains of about the same amount in the S&P 500 and a strong 0.9% gain in the NASDAQ. By contrast, European markets were much weaker with a drop of 1% in the Euro Stoxx and nearly a 1% decline in the FTSE.
  • Asian markets have opened on a softer footing today with the Nikkei down by 0.8% and the Hang Seng lower by the same amount.
  • Local markets had a mixed close. The DFM added 0.9% while the ADX was lower by 0.3%. In Saudi Arabia the Tadawul fell by 0.7%.


  • Oil prices traded sideways for much of the day but managed to close higher by 0.4% in Brent markets at USD 81.92/b and up 0.2% in the WTI at USD 77.90/b. The API reported a draw in US crude stocks of 2.4m bbl last week along with a drop in gasoline inventories. Distillate stockpiles were slightly higher.
  • OPEC kept its oil demand growth forecast for 2024 unchanged at 2.25m b/d with most of the gains coming from emerging economies according to its latest monthly oil market report. For 2025, OPEC is holding to a demand forecast of 1.85m b/d. It left its estimates for non-OPEC+ supply growth this year and next likewise unchanged. OPEC is projecting that oil demand growth will accelerate over the second half of the year to an average of 2.3m b/d

Written By

Edward Bell Head of Market Economics

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