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HomeWorld NewsThe BoE voted to increase Bank Rate. Labour force participation the highest...

The BoE voted to increase Bank Rate. Labour force participation the highest recorded

Per Statistics Canada employment was little changed in July (-6,000; -0.0%). The unemployment rate increased 0.1 percentage points to 5.5%, marking the third consecutive monthly increase.
There were fewer people employed in construction (-45,000; -2.8%), public administration (-17,000; -1.4%), information, culture and recreation (-16,000; -1.8%) as well as in transportation and warehousing (-14,000; -1.3%). Employment rose in health care and social assistance (+25,000; +0.9%), educational services (+19,000; +1.3%), finance, insurance, real estate, rental and leasing (+15,000; +1.1%) and agriculture (+12,000; +4.6%).
On a year-over-year basis, average hourly wages rose 5.0% in July, following increases of 4.2% in June and 5.1% in May.
Total hours worked were virtually unchanged in July and were up 2.1% on a year-over-year basis.

Total nonfarm payroll employment rose by 187,000 in July, and the unemployment rate changed little at 3.5 percent, the U.S. Bureau of Labor Statistics reported today.

Job gains occurred in health care, social assistance, financial activities, and wholesale trade.

Both the unemployment rate, at 3.5 percent, and the number of unemployed persons, at 5.8 million, changed little in July. The unemployment rate has ranged from 3.4 percent to 3.7 percent since March 2022.

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment. At its meeting ending on 2 August 2023, the MPC voted by a majority of 6–3 to increase Bank Rate by 0.25 percentage points, to 5.25%. Two members preferred to increase Bank Rate by 0.5 percentage points, to 5.5%, and one member preferred to maintain Bank Rate at 5%.

The Committee’s updated projections for activity and inflation are set out in the accompanying August Monetary Policy Report. These are conditioned on a market-implied path for Bank Rate that rises to a peak of just over 6% and averages just under 5½% over the three-year forecast period, compared with an average of just over 4% for the equivalent period at the time of the May Report. The sterling effective exchange rate is around 4% higher than in the May Report.

Underlying quarterly GDP growth has been around 0.2% during the first half of this year. Bank staff expect a similar growth rate in the near term, reflecting more resilient household income and retail sales volumes, and most business surveys over recent months. Some more recent indicators show signs of weakening, however, including the July S&P Global/CIPS UK composite PMI.

The seasonally adjusted unemployment rate was 3.6 percent in the June 2023 quarter, compared with 3.4 percent last quarter, according to figures released by Stats NZ.

Unemployment, along with underemployment and the potential labour force, is one of the components that comprise underutilisation – a broader measure of spare labour market capacity than unemployment alone.

The underutilisation rate increased from 9.1 percent (revised) to 9.8 percent this quarter. The largest increase came from growth in underemployed part-timers, who wanted and were available to work more hours.

In the year to the June 2023 quarter, the labour force participation rate reached 72.4 percent, the highest rate recorded since the Household Labour Force Survey (HLFS) began in 1986.

At its meeting today, the Board of the Reserve Bank of Australia decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.00 per cent.

Interest rates have been increased by 4 percentage points since May last year. The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so. In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.