UK Average Earnings Index + Bonus Beats Market Expectations
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Summary:
- The UK average earnings index + bonus came in bullish/bearish.
- The GBP is predicted to avoid reaching parity with the USD but will continue to trade at historically low levels.
UK Average Earnings beat market expectations
For August 2022, the rate of UK Average Earnings Index + Bonuses was 6.0% and the rate for unemployment was 3.5%. The rates of growth in both total and regular pay are comparable, which has not been the case for a while. The market expectation for the UK average earnings index + bonus was set at 5.9%, the UK succeeded in beating the market's expectations for the month of August.
The reading showed a higher than expected Average Earnings Invex and should be interpreted as bullish or positive for the pound.
The Average Earnings Index tracks changes in the amount that the government and businesses are willing to pay for labor, including bonuses. The Average Earnings figure provides us with a good indicator of the growth in personal income for the particular month.
UK Average Earnings effect on the economy
Highlights from the most recent survey reveal that over the rest of the year and into early 2023, the pound is predicted to avoid reaching parity with the dollar but will continue to trade at historically low levels.
The U.K. economy has been running out of workers, even as it slows considerably under the weight of the ongoing cost-of-living problem, according to figures released for the month of July. According to the Office for National Statistics, employment growth slowed significantly in the three months leading up to July as the labor pool dried up due to the summer's heat waves and the pandemic's aftereffects. However, now it seems that the UK economy is a little more well supported.
Higher than expected data indicates that the Bank of England's tightening of monetary policy is having some sort of an impact on wages, which, however, are still growing too slowly to keep up with the still-rising annual inflation rate.
The initial market reaction to the release of this data showed the pound sterling weaken against the EUR and the USD.
Sources: investing.com, ons.gov.uk, poundsterlinglive.com
