Archive

Policy Tightness is Gradations of Weak

• The PMIs mostly revealed surprise resilience in April, albeit with the US disappointing. Divergent surprises may reflect excessive spread changes in policy expectations.
• Residual seasonality may exaggerate current strength and unwind in the summer, but stability in unemployment trends still suggests global monetary policy is not that tight.
• Persistent excess demand requires tight conditions to be sustained. The BoE MPC seems desperate to cut, but resilience should delay it, including relative to Fed pricing.

By Philip Rush

Australia Unemployment Rate 3.84% (consensus 3.9%) in Mar-24

- Australia's unemployment rate in Mar-24 increased by marginally less than the consensus forecast, indicating relative stability in the labour market.
- However, the 3.84% rate remains higher than the one-year and long-run averages, and employment decreased, signalling weaker demand.

UK Paying More for Fewer Workers

• UK unemployment jumped surprisingly far in February 2024 to hit 4.2% as employment fell. More long-term jobless suggests this is neither a new shock nor too disinflationary.
• Average earnings growth surged by 0.7% m-o-m, meaning the wage bill still rose despite fewer jobs. Regular pay growth is in rude health at 6% y-o-y or 2.1% in real terms.
• Wage settlements are stuck at 5%, with a skew higher into April. Embedded inflation expectations are too high and demand tight policy despite some cyclical softening.

By Philip Rush

Switzerland Unemployment Rate 2.3% (consensus 2.2%) in Mar-24

- Switzerland's unemployment rate for March 2024 was 2.3%, slightly higher than expected and the highest since February 2022.
- The rate is 0.19% above the one-year average, suggesting an unfavourable employment situation through the slightly rising trend.