- David Tinsley at BNP Paribas
The unemployment rate hit the lowest level in more than five years, while the number of people claiming unemployment benefits fells more than expected. All these factors are speaking in favour of economic strengthening, and constantly decreasing level of slack within the economy. In theory, Wednesday's data should be mentioned during Carney's speech on Thursday, as figures are supporting the case of sooner-than-expected tightening of the monetary policy.
A widely-anticipated report from the ONS showed that the jobless rate fell to 6.6% in three months through April, from 6.8% a quarter earlier, and beating markets' expectations for a drop to 6.7%. That brings the indicator to the lowest since October to December 2008 and moves further away from the 7% threshold imposed by the central bank as a proxy of economic health. Additionally, the number of Britons claiming for jobless benefits plunged by 27,400, beating markets' expectations, however slightly less than previous month's revised drop of 28,400. It means there is now 2.16 million people without a work in the U.K. The only worrying sign is a drop in the rate of earnings, as indicator slowed to 0.7% from 1.9% in the prior month. The main reason for a drop were delayed bonus payments, hence, the indicator is likely to pick up in the coming months. Despite the improvement in the labour market, the BoE will remain committed to its pledge to keep rates on hold.
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