Leading Indicators | Rate cuts postponed, a cooling labour market & the UK's growing population
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Here we look at the leading indicators in the world of economics.
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Money markets are pricing in just one rate cut from the BoE in 2024
UK inflation held steady at 2% in June, albeit sticky services inflation has led money markets to reconsider the likelihood of a rate cut next month. Markets are now pricing in a 30% chance of an August rate cut, down from 50% two weeks ago. Since January, market expectations of anticipated rate cuts have dropped from six to just one currently.
UK wage growth declines to lowest level since 2022
Private sector wage growth, a measure closely monitored by the BoE for indications of a tight labour market, slowed to 5.6% in the three months to May 2024, from 5.9% in the three-month period prior. Meanwhile, average earnings (excl. bonuses) fell to 5.7%, its lowest level since 2022.
The UK’s population is expected to grow faster than most G7 nations
The UK population is expanding, with growth averaging +0.6% y/y from 2000 – 2022. This highlights the demographic advantage that Britain has gained over other European countries. In contrast to Germany, Italy, and Japan, for which the World Bank predicts stagnant or shrinking populations, the UK is forecast to see robust growth.
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