Unemployment Rate Highest In Three Years

The latest economic data out of the UK this morning has heightened concerns around the labour market. The Office for National Statistics published data showing that the UK unemployment rate rose to 4.5% between June and August, from the prior three-month’s 4.1%. This takes unemployment back up to its highest level since 2017 and marks the largest quarterly increase since July 2009. Annually, the increase was the largest since November 2011.

Looking at the breakdown of the data released by the ONS, an estimated 1.52 million people registered unemployed over the June – August period, marking an increase of 209k annually and 138k quarter-on-quarter. The number of people employed fell by more than 150k over the quarter to 32.6 million, taking the employment rate down from 75.9% to 75.6%.

Youth Employment Suffering Most

In terms of who was most affected, the ONS said: “men in employment decreased by 115,000, while women in employment decreased by 38,000. This quarterly decrease was driven by people in employment aged 16 to 24 years, the self-employed and part-time workers, but was partly offset by increases in employment for people aged 25 to 64 years and full-time employees”. men in employment decreased by 115,000, while women in employment decreased by 38,000. This quarterly decrease was driven by people in employment aged 16 to 24 years, the self-employed and part-time workers, but was partly offset by increases in employment for people aged 25 to 64 years and full-time employees.

Redundancies See Biggest Rise on Record

One of the most troubling aspects of the report was the record increase in redundancies over the quarter. The number of people being laid off jumped by 114k on the quarter to 227k ( all time high) and 113k annually, marking the largest annual increase since June 2009 in the wake of the global financial crisis.

Job Losses To Be Worse Than During GFC

With redundancies growing at their fastest pace on record there are grave concerns for the UK employment outlook heading into the winter. With the government winding down its furlough scheme, many analysts are forecasting an employment crisis in the UK over the coming months. With many businesses likely to have to let staff go as they can’t afford to keep them on once furlough stops and with the potential for further lockdowns to hurt businesses more an increasing number of forecasts suggest that more jobs will be lost as a result of the pandemic than through the global financial crisis in 2008/2009.

Technical Views

GBPUSD (Bullish above 1.3191)

From a technical viewpoint. The rally in GBPUSD has seen price breaking back above the long term bearish trend line as the recovery off the 1.2649 support continues. Price is now retesting the underside of the broken bullish channel, with the 1.3191 resistance sitting just above. This will be a key test for bulls and will determine whether the bullish move can regain momentum or whether price will settle into a range between 1.2649 and 1.3191.

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