Daily Market Report - 20/04/2015

Britain's economy created the largest number of new jobs in nearly a year and unemployment hit its lowest rate since mid-2008 market data showed on Friday, the last such report before a closely fought election on May 7. Prime Minister David Cameron hailed the numbers, which cover the three months to February, as underlining his government's "jobs miracle". The data helped the pound hit its highest level in nearly four weeks against the dollar.
The unemployment rate now stands at 5.6 percent, down from 7.9 percent at the time of the last election. But the pace of growth in workers' pay was largely unchanged at nearly 2 percent.
With inflation at zero, the gradual recovery in pay is giving relief to workers who suffered an almost unprecedented loss of spending power during Cameron's five-year term.
The number of people in employment rose by nearly a quarter of a million - the biggest increase since April last year - to a record 31.05 million. The employment rate also jumped to hit an all-time high of 73.4 percent.
Cameron got a boost when the head of the International Monetary Fund said his government's plan was working, although the Fund has also questioned the country's budget forecasts. "When we look at the comparative growth rates delivered by various countries in Europe, it's obvious that what's happening in the UK has actually worked," Christine Lagarde said on Thursday at meetings of global policymakers in Washington.

The cost of living in the U.S. excluding food and fuel rose 0.2 percent in March for a third month, signalling inflation is starting to firm. The increase in the core consumer-price index reflected broad-based gains in rents, medical care, clothing and used vehicles. The advance matched the median forecast of economists. Including the volatile costs of food and energy, the index also rose 0.2 percent.
A strengthening labour market may be giving workers the confidence to seek bigger wage concessions, which would prompt companies to raise prices for goods and services. Federal Reserve policy makers want to see inflation on a trajectory toward their 2 percent goal as they weigh the timing of their first interest rate increase since 2006.
Estimates for core consumer prices ranged from gains of 0.1 percent to 0.3 percent. On a year-over-year basis, core prices climbed 1.8 percent in March, the biggest 12-month advance since October, after rising 1.7 percent in February. The forecast for CPI including all costs ranged from no change to a 0.5 percent increase, with the median at 0.3 percent. Consumer prices dropped 0.1 percent in the 12 months ended March after being little changed in the year through February.
Fed officials are monitoring inflation as they seek reasonable confidence in the trajectory of price growth toward their 2 percent target. The policy-setting Federal Open Market Committee was split at its meeting last month on the timing of lift off. Several participants wanted to normalize policy starting in June, while others favoured later in the year, according to minutes of the March 17-18 meeting.
Disappointing payrolls data were among weaker-than-forecast economic reports since then that have cast doubt on expectations that the central bank will increase borrowing costs in June, making September more likely, according to economists.
The Fed’s preferred measure of price pressures, linked to consumer spending, climbed by 0.3 percent in February from a year before, the Commerce Department reported last month. It hasn’t been at the central bank’s 2 percent goal since April 2012.
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