UK Unemployment Data Holds Promise of Economic Recovery
According to a report by Markit, the United Kingdom has witnessed another piece of positive economic news — this time in the labor sector. The main headline was that the unemployment rate in the United Kingdom dropped from 7.8 percent to 7.7 percent in the month of August. While this seems like a small decrease, it represents 24,000 fewer unemployed citizens in the country. It also beats the expectations of most economists who thought that unemployment levels would hold steady during the month.
One immediate consequence of the news was a rise in the value of the British pound. The pound climbed 0.4 percent when compared to a basket of other currencies, posting significant gains against the dollar and the euro. Its current level represents a nearly seven month high for the British currency.
The news has mixed implications for Mark Carney, the governor of the Bank of England. Carney had outlined forward guidance for interest rates, declaring that they would be held at their historic low levels of 0.5 percent at least until unemployment in Great Britain was below the 7 percent threshold. Most economists had predicted that this would not occur until 2016, perhaps even later in the year or in the year following. However, after strong manufacturing and retail performances in the U.K. in the month of August, the unemployment data is just another, more direct sign that the 7 percent benchmark could be attainable as early as mid-2015.