UK labour data will keep the domestic economy on the right track and the BOE hawks happy
Today's data is great news for the UK. The jobs market remains strong and the wage data is as good a sign of that as any
Like everyone else the UK faces export weakness in the current global market and that has been the main driver for weaker sector data from the UK. When we were recovering back in 2013 both the domestic an international parts of the economy were recovering together. The domestic art was always the stronger but it all went into the pot. Now we're finding it tough to sell abroad and we're seeing the effect of that in the data
This data today will go along way to underpinning the economy on the domestic front. In real terms that's the only part the BOE has any control over. If the UK remains strong domestically then the BOE will be able to hike rates. Because of these two parts to our economy it means that even further falls in the main data numbers won't necessarily add weight to the no-cut arguments. The distinction will have to be made whether any weakness is caused by domestic or international influences
It means we have to delve into the data a little deeper now to find the clues. The wider market may trade the normal 'Bad data = lower rate hike chances' but the reality may be quite different
The data today reduces my worries that the UK will see a big slowdown and that we're probably just going to see a consolidation phase in the data and economy
For the BOE, the data today should embolden the MPC to keep on their projected path for rates and it may even be enough to see a few more members jumping across to the hike side of the road at the next MPC meeting
For the pound. It's too early to tell but I wouldn't be surprised if we start to see more support coming in now. If we look like basing then any hawkish FOMC news that sinks the pound will be a good dip buying opportunity
UK wages on the up
