At the start of this week, we compared the labor situations of the U.S. and Canada. This time, let’s take a look at the employment reports from the U.K. and Australia.
The U.K. printed a better than expected claimant count change report for May, showing a 27,400 drop in unemployment for the month and bringing the jobless rate down from 6.8% to 6.6%, its lowest level in five years. This was much stronger than the estimated 25,000 fall in joblessness and the projected 6.7% unemployment rate.
On top of that, the April claimant count change figure was revised to show a 28,400 drop in joblessness from the initially reported 25,100 reading. Components of the labor report revealed that the gains were actually spurred by companies hiring full-time workers rather than rising self-employment, which is good news.
Wage growth, however, has slowed down from 1.9% to 0.7%. Insiders at the Office of National Statistics revealed that this was probably just due to a delay in bonus payments in the previous month, which distorted some salary figures.
Over in the Land Down Under, labor data painted a completely different picture. The employment change report for May showed a 4,800 decline in hiring when analysts were expecting to see a 10,300 gain. To top it off, the April figure was revised down from the initially reported 14,200 increase in employment to just 10,300.
Despite that, the jobless rate managed to hold steady at 5.8% instead of rising to the estimated 5.9% figure. However, this was mostly a result of a worsening participation rate, which fell 64.7% to 64.6%. This indicates that some Australians may be leaving the labor force and giving up looking for full-time work.
With weakening consumer confidence after the announcement of government budget cuts, Australia might be in for more labor market weakness in the coming months. Several analysts believe that this is a sign that the RBA will not be hiking interest rates anytime soon.
In terms of price action, it appears that the divergence between the jobs data of these two major economies is starting to unfold on GBP/AUD:
As you can see from the chart above, support at the bottom of the range is holding and that the pair might be on its way to test the range resistance at the 1.8300 major psychological level. Do you think it can go all the way up there?