Unemployment rate shows confidence in the economy

Ian Forrest, investment research analyst at The Share Centre, explains what the latest unemployment figures from the Office of National statistics mean for investors.

Unemployment rate shows confidence in the economy

Today’s UK employment data showed the unemployment rate for the three months to August remaining at 4.9%, which was as expected, although the number of people in work rose by 106,000 to 31.81m which is 560,000 more than a year ago.

Following yesterday’s news of a rise in inflation to 1% it was interesting to note that average earnings excluding bonuses rose by 2.3%, which was slightly ahead of the previous period and more than expected. However, if inflation continues to rise due to Sterling’s weakness, as many expect, then real earnings growth will quickly diminish and may even lead to a real fall in incomes by next year.

For investors this data is moderately better than expected and provides further evidence that the initial economic impact of Brexit on the UK economy has not been as bad as many feared. All eyes are now on the announcement next week of Q3 GDP and then the market will start to focus more intently on what may be in the Chancellor’s Autumn Statement later in November.

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