GBP/USD moves higher
In a sign of the times the number of people resigning from their jobs has fallen to a five year low, as workers have little choice but to ride out the economic uncertainty. So if any of you are fed up with your job or your boss, I would strongly recommend you grin and bare it! The survey showed that 3.9% of staff quit their jobs in January, compared to 4.7% the year earlier. It also revealed that the average pay increase in the 12 months to February was just 2.2% – the lowest wage increase in more than a decade. As discussed yesterday, with inflation levels currently at 4.4% people are effectively taking a pay cut, as prices increases outstrip wages increases.
Surprisingly, it was the manufacturing sector that fared worst in the survey, with wage increases averaging 2.5% compared to 2.9% across the private sector. I say surprisingly, as manufacturing has been the strongest performing sector of the UK economy and with such skills in high demand, this would usually require employers to pay a premium.
Manufacturing will take centre stage tomorrow when the UK’s Purchasing Managers Index is released. The survey is expected to show that manufacturing remains strong, albeit at a slightly slower pace than the record levels experienced in the previous two months. Similarly, German and euro zone PMI manufacturing figures are also released tomorrow morning, with both again expected to show healthy manufacturing sectors.
Staying in Europe and Portugal is once again taking centre stage. Reports in this morning’s papers suggest that the debt laden nation faces around 9 billion in debt repayments by June, but only has 5 billion in cash to meet them. It doesn’t take a mathematician to work out this is not a good situation and although the country would most likely be able to borrow the money, it shows country’s finances are in dire straits. With interest payments above 8%, a level the government admits is unsustainable, the country’s credit rating being cut and the government unable to pass austerity measures, the need for a Portuguese bailout now seems almost inevitable.
In overnight trading the pound was slightly lower against the euro at 1.1365, with the prospect of a euro zone rate hike supporting the euro. The pound did make some gains against the dollar however at 1.6120, with higher risk appetite weighing on the dollar.