UK employment numbers this morning show the number of job vacancies has surpassed those of pre-pandemic levels. In the three months to June, the ONS said there were 862,000 jobs on offer, 77,500 higher than in the first three months of 2020, before Covid-19 hit UK shores. However, such statistics are being met with caution, as the number of workers on payroll remained 206,000 below pre-pandemic levels. Vacancies in hospitality and retailing, arguably some of the hardest hit industries, are driving up the numbers of open job roles.
Still sterling had a good day, reaching its highest level against the euro since April. The pound has been bolstered by a few good news stories this week, namely, of course, that the majority of restrictions will be lifted in the UK next week – we had to wait for Scotland, Wales and Northern Ireland to also confirm they’re following suit.
The speed of the UK vaccination programme has supported sterling against the euro and the US dollar this year. As the majority of UK adults are now jabbed with their first dose, it’ll be interesting to see how sterling, and other majors responds. It’s also important to note that the UK government has struck a cautious tone in that Covid cases are extremely likely to continue rising across the summer, prepping investors for the possibility of choppy waters ahead.
Data all round
Australian unemployment data told a different story compared to the UK’s. Its rate fell to 4.9% but unemployment is up as new lockdowns take their toll. So despite some 30,000 new jobs last month, fresh lockdowns in Victoria are hindering the country’s recovery.
Eurozone Industrial Production dropped by 1% in May, which was unexpected with economists polled by The Wall Street Journal forecasting a 0.1% drop. The suggestion is that the manufacturing sector could be losing its recovery momentum. Output from factories, mines and utilities across May fell, with the blame being laid at the feet of supply chain disruptions.
Despite this, the euro didn’t really wobble, propped up against the US dollar after Powell’s testimony.
Pressure & Powell
US central banks are under immense pressures as prices surge, with official figures showing that the consumer price index (CPI) has jumped by an annual rate of 5.4% in June, the largest spike in 13 years. Powell’s testimony in Congress yesterday sought to ease concerns over US inflation and that the world’s largest economy is, as the FT put it, "overheating", but he very much stuck to his guns that these increases are temporary and will eventually subside.
Powell pushed back the suggestion that the bank is complacent surrounding such risks, and that he understands the public’s frustrations and worries, saying, “I know people are very worried about inflation…we hear that loud and clear from everybody . . . it is really going through the economy and through every business”. The US dollar wasn’t helped by Powell also admitting that inflation will be high for months, gifting the greenback a tricky day.
It’s not over though, and all eyes will be on day two of Powell’s testimony in front of anxious Republicans and Democrats. Outside of the US, the Monetary Policy Committee’s Michael Saunders will also be speaking about inflation outlook today.