• Jobs report for the United Kingdom could significantly impact the BoE rates outlook.
• The Unemployment Rate in the UK is likely to hold steady at 3.8% in the quarter to May.
• Office for National Statistics is set to publish the UK labor market report at 06:00 GMT.

The Office for National Statistics is scheduled to publish the United Kingdom’s jobs data this Tuesday, which is expected to show a decline in the country’s Unemployment Rate in the three months to May.  

The UK labor market remains very tight notwithstanding the pressure of 13 consecutive interest rate increases by the Bank of England (BoE) since late 2021 to tame inflation. In the quarter through April, ILO Unemployment Rate fell to 3.8% from the 3.9% recorded in the previous period, beating the market consensus of a 4.0% print.

Meanwhile, the number of people claiming jobless benefits dropped by 13.6K in May, compared with the expected decrease of 9.6K. The Claimant Count Change unexpectedly jumped by 23.4K (an upward revision from 46.7K) in April.

The UK’s Average Weekly Earnings, excluding bonuses, surged 7.2% 3Mo/YoY in April versus 6.8% prior. The gauge including bonuses rose 6.5% 3Mo/YoY in the fourth month of the year as against a 6.1% increase seen in March. It’s worth noting that the April data included the impact of a 9.7% rise in the minimum wage.

The real concern remains the persistent shortage of workers, which is driving up wage inflation. The number of people unemployed fell by 25,000 in the quarter through April compared with the three months through March. The BOE is concerned that the slack in the growth of workers will continue stoking inflationary pressures, through a wage-price spiral, keeping it on track to deliver more rate hikes