The British FTSE 100 index traded slightly higher Tuesday, up eight consecutive days and approaching all-time highs at around 8,000 points.
UK labor market remains strong
Earlier in the day, the unemployment rate increased slightly in the three months leading up to February, according to figures released by the Office for National Statistics.
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An increase of 0.1% brought the unemployment rate to 3.8%. According to the ONS, people who had been out of work for up to six months were a significant factor in this. However, the rate was projected to remain unchanged by experts.
Meanwhile, the employment rate rose to 75.8%, a gain of 0.2% over the prior quarter. The ONS credits this to the rise in part-time and freelance workers.
The job openings decreased by 47,000 during the quarter, bringing the total to 1,105,000. This was the ninth consecutive decline and reflects “a state of uncertainty across industries, as poll respondents keep pointing to economic difficulties as a factor in holding back on recruitment,” the ONS said.
According to the ONS, regular pay without bonuses grew by 6.6% between December and February, while total income grew by 5.9%. However, regular pay declined by 2.3%, and total compensation fell by 3% in real terms.
“Wage growth has slowed notably on a monthly basis since December, and we look for that to continue through February, helping to bring annual wage inflation down further.“ Analysts at TD Securities said after the data.
The Bank of England (BoE) may be forced to increase interest rates if the labor market holds its positive momentum. Moreover, the UK finance minister expressed optimism about the country’s economic future. According to UK Hunt, the British economy will thrive in 2023. There will be no economic downturn as a result, too.
US housing market deteriorates further
In the US, the number of new single-family houses started was down 0.8% from the previous month, coming in at 1.42 million on an annualized basis. Likewise, the number of building permits issued, an indicator of future construction, dropped 8.8% from the previous month to an annualized pace of 1.41 million in February.
For his part, Tom Barkin, president of the Richmond Federal Reserve and a member without a vote of the Federal Open Market Committee (FOMC), which decides interest rates, said on Monday that he wants “more evidence that inflation is settling back to our target” and that the “labor market has moved from red-hot to merely hot.”
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Similarly, James Bullard, president of the Federal Reserve Bank of St. Louis, indicated in an interview on Tuesday that further rate rises will be necessary to achieve the Fed’s inflation target.
Before the Fed’s blackout period begins on Saturday, several officials are scheduled to speak this week, and the market is eager to hear if they all sound the same.
FTSE daily chart, source: author´s analysis, tradingview.com
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