In today’s briefing:
- UK: Labour Market Losing Some Tightness
- EA: Underlying Inflation Falling Past Peak
UK: Labour Market Losing Some Tightness
- The UK’s unemployment rate maintained the higher level it jumped to last month, with repeat respondents to the survey reporting slightly higher unemployment again.
- Job vacancies are near their lows of the past year, and payroll numbers may already be falling. Only the highest earners are keeping their pay ahead of the inflation squeeze.
- Pay settlements appear to have stabilised, which should ease the BoE’s concerns about potentially more persistent pressures requiring a more aggressive tightening pace.
EA: Underlying Inflation Falling Past Peak
- EA HICP inflation was unrevised from 8.64% in the final print for Jun-22, and the HICPxT rose to 8.8% y-o-y, in line with our forecast.
- The outlook for the next few months still looks relatively flat, albeit at painfully high inflation rates. The current consensus forecast profile is very similar to ours.
- Underlying inflation appears to have peaked, with the monthly impulse broadly falling over the past two months. It is still running at about double target-consistent rates.
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