UK April ILO unemployment rate falls to 4.9%, wages beat forecasts
UK unemployment fell more than expected in April while wage growth accelerated, reinforcing expectations that the Bank of England will hold rates steady.
UK employment data for April showed a stronger-than-expected labor market, with the ILO unemployment rate falling to 4.9% from 5.0% in the prior period, against forecasts of 5.0%. Employment change surged by 100,000, well above the 75,000 consensus estimate, while average weekly earnings including bonuses rose 4.4% year-on-year, beating the 4.0% expected. Excluding bonuses, earnings grew 3.4%, also above the 3.2% forecast. May payrolls data showed a modest increase of 2,000, following a revised decline of 53,000 in April.
For interest rate traders, the data reinforces a hawkish tilt at the Bank of England. A tight labor market with accelerating wage growth suggests persistent domestic inflationary pressures, reducing the likelihood of near-term rate cuts. The BoE had been expected to begin easing later this year, but this report pushes those expectations further out. The OIS market now prices a lower probability of a cut at the August meeting. Live rates and charts on NowPrice show how short-sterling futures and gilt yields are reacting to the release.
Looking ahead, the next key input for the BoE will be the May CPI print due next month. If services inflation remains sticky alongside robust wage growth, the case for holding rates through the summer strengthens. Traders will also watch the June PMI surveys for signs of whether the labor market strength is translating into broader economic momentum. The next MPC meeting is scheduled for August 7, with markets now pricing a roughly 30% chance of a 25-bps cut, down from near 50% before the data.