GBP
The UK’s unemployment rate fell yesterday from 6.2% to 6%, the lowest level
seen since October 2008. The number of people out of work in the UK fell by
154,000 in the three months to August. That takes Britain’s jobless total down
to 1.972 million. This is the largest annual fall in unemployment on record.

Real wages in the UK economy are still shrinking, however, there are signs that
the gap between wage growth and inflation are closing at last. The ONS reported

GBP
The UK’s unemployment rate fell yesterday from 6.2% to 6%, the lowest level
seen since October 2008. The number of people out of work in the UK fell by
154,000 in the three months to August. That takes Britain’s jobless total down
to 1.972 million. This is the largest annual fall in unemployment on record.

Real wages in the UK economy are still shrinking, however, there are signs that
the gap between wage growth and inflation are closing at last. The ONS reported
yesterday that average earnings including bonuses in the UK rose by just 0.7
annually in the June – August quarter. However, Tuesday’s fall in inflation to
1.2% has closed the gap between wage growth and inflation to 0.5%.

Due to yesterday’s weak inflation figures and today’s poor wage growth figures,
economists are again rewriting their predictions for when the Bank of England
will start to raise interest rates. Some analysts expect a rate rise
in November are now expecting the  BoE will hold interest rates
at 0.5% until next summer. This explains the fall in GBP against most
currencies over the last two days.

USD
There was a triple dose of bad news from America yesterday. US retail sales
fell 0.3 per cent in September, the first decline since January, and worse than
the 0.1% decline expected, suggesting consumers are becoming more cautious
by cutting back  spending.

US producer prices (what firms receive for their goods) has also fallen, down
0.1% in September, in the first decline since August 2013. That is the latest
in a swath of signs that inflation is falling.

The Empire manufacturing report, which tracks factories in the New York area
also slumped. It fell to 6.17 this month, from 20.5 in September. Both
 manufacturing conditions and the new orders index  hit the
lowest level since April.

This has all added to fears of a global economic slowdown with weak inflation
data being reported in the UK, America and China the past two days, coupled
with the continued deflationary pressures in the Eurozone. World stock markets
also fell sharply yesterday, with investors seeking save havens pushing down
the yields of both UK and USA government bonds and the price gold being pushed
up

EUR
In the Eurozone yesterday, Germany’s CPI figures remained unchanged at
0.8%. Market troubles also flared up in Greece again yesterday. Greek
equities fell 6.3% yesterday and Greek 10-year bonds have jumped from around 7%
to 7.5%. 

Key Announcements:
10:00 BST:  EUR – Eurozone Consumer Price Index (YoY) expected to fall to
0.3%
13:30 BST: USD – US Initial Jobless Claims expected to rise to 290k
13:30 BST: USD – US Continuing Jobless Claims expected to fall to 2.38M
14:15 BST: USD – US Industrial Production (MoM) expected to rise to
0.4% 

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