UK wages growth slips, as Bank of England governor warns on no deal Brexit - as it happened
Unemployment remains at 4.2% and wage growth slips back to 2.5%; Mark Carney tells MPs that no deal Brexit would have big economic consequences
2.42pm BST
Bank of England governor Mark Carney has told MPs that a no-deal Brexit would have "big" economic consequences and could prompt a review of interest rates.
The Bank is widely expected to raise rates early next month, although it is by no means a certainty. The latest UK data shows unemployment steady at 4.2% but wage growth slipping back to 2.5%. While it is still above the latest 2.4% inflation rate, that could change tomorrow if - as expected - the year on year June figure rises to 2.6%.
2.37pm BST
US markets have slipped back at the start of the day's trading.
The Dow Jones Industrial Average is down 0.14%, while the S&P 500 opened 0.32% lower and the Nasdaq Composite fell 0.7%, as the disappointing Netflix update weighed on the market and sent the streaming service's shares down around 14%.
2.34pm BST
Here's Investec's chief economist on the pound:
Brexit dynamics undermining sterling right now - Eurosceptic rebels out in force last night in the Commons, remainers probably this evening. And parliament unlikely to vote to bring recess forward by 5 days to Thursday. End result, the pound falls v USD and EUR. pic.twitter.com/BlipU81agx
2.03pm BST
The latest Brexit uncertainties have sent the pound to its lowest levels of the day.
Against the dollar it is down around 0.7% at $1.3146 while against the euro it has fallen 0.43% to a1.1245.
Looking messy for $GBP now. #GBPUSD down to 1.3150 & #EURGBP could test 0.89. This is markets bracing themselves for a 'no idea' Brexit & a possible leadership challenge to May. Govt defeat tonight will be a reality check of crisis. Near-term outlook for $GBP looking negative https://t.co/lvH7rvxOIV
1.53pm BST
Over in New York, Goldman Sachs has confirmed that Lloyd Blankfein will step down as chairman and chief executive, the positions he has held since 2006.
He will be replaced in both roles by co-chief operating officer David Solomon, who has a sideline as DJ D-Sol, spinning dance music at nightclubs.
12.41pm BST
Bank of England governor Mark Carney has said a no-deal Brexit would have big economic consequences and prompt a review of interest rates, as well as leaving many bankers idle, reports Reuters:
"Our job is to make sure we are as prepared as possible," Carney told lawmakers at a parliamentary hearing held at an air show in Farnborough, southern England.
Crashing out would prompt the BoE's monetary policy committee to reassess the economic outlook and interest rates.
#CARNEY swoops at @FIAFarnborough #airshow. Tone of comments isn't new. But a reminder that EU crash-out w. no deal could trigger rates rethink: "Would be a material event. I wouldn't prejudge in which direction, though" At worst, fragile #GBPUSD eyes $1.3092-31 range again ^KO pic.twitter.com/S7qqVTR9gz
11.35am BST
Here's our story on the day's UK data:
The rate of pay growth for British workers has fallen to the lowest level in six months, despite record numbers of people in work across the country, official figures show.
Heaping renewed pressure on the Bank of England to delay raising interest rates from as early as August, the latest snapshot for the British labour market showed workers are still unable to demand higher pay despite the lowest unemployment levels since the mid-1970s. High rates of employment and low levels of unemployment usually signal rising wages.
Related: UK wage growth slides to lowest rate in six months
11.33am BST
The pound is now virtually flat against the dollar, and the FTSE 100 has dipped just 0.15% in the wake of the latest UK data. Connor Campbell, financial analyst at Spreadex, said:
The UK jobs report failed to move the needle on Tuesday, with investors seemingly waiting for Wednesday's inflation reading before making a call on what the Bank of England might do in August.
For the quarter to the end of May wage growth including bonuses came in at 2.5%, down on the 2.6% seen for the previous 3 months; remove bonuses and wages still saw a similar decline, from 2.8% to 2.7%. Though a smidge higher than the 2.4% inflation reading seen for the same period, real wages are hardly healthy at the moment, especially with the UK CPI set to jump back to 2.6% in June.
10.46am BST
Elsewhere the UK Office for Budget Responsibility has warned on the state of the country's finances. Reuters reports:
Britain's budget watchdog on Tuesday outlined a gloomier picture for the government's finances in the long term, reflecting recent pledges to increase health spending without tax hikes or spending cuts to pay for it.
The Office for Budget Responsibility (OBR) stuck to its view that the public finances are likely to come under significant pressure from an aging population.
From the @OBR_UK's fiscal sustainability report (https://t.co/ggZCvgaw71) - what happens when immigration falls: pic.twitter.com/EAKQ5yjvcP
10.35am BST
Even if the Bank of England does raise rates in August, the Brexit uncertainty casts some doubt on further increases, reckons economist James Smith at ING Bank:
For the Bank of England, rising wage growth is a key pillar of its rate hike rationale. So at face value, the latest slip in average earnings (ex bonuses) to 2.7% may appear disappointing.
However, it's worth noting that, like last month's fall, this is mainly a function of base effects. Wage growth was particularly weak in early 2017, but began to recover from the second quarter - meaning the year-on-year growth rates are beginning to ease. Admittedly the recent momentum has slipped a little too. But with Bank of England Agents still pointing to skill shortages resulting in more rapid pay increases, we doubt the recent figures will lead to any kind of rethink amongst the committee on the overall trend for wages.
10.20am BST
On interest rates, Bank of England governor Mark Carney said at Farnborough a no-deal Brexit would be a material event for borrowing costs. Reuters reports:
Bank of England Governor Mark Carney said on Tuesday it would be a "material event" for interest rates if Britain leaves the European Union next year without a deal to smooth its departure.
"Our job is to make sure we are as prepared as possible," Carney told lawmakers at a parliamentary hearing held at an air show in Farnborough, southern England.
10.01am BST
With the slip in wage growth to 2.5%, any increase in inflation tomorrow could see real incomes squeezed again. Analysts are forecasting inflation could rise from 2.4% to 2.6%. Ed Monk, associate director for Personal Investing at Fidelity International said:
While today's figures may put wage growth above last month's CPI inflation reading for May, any reason for British households to cheer could be short lived as there is a possibility that we could see inflation jump back up and over take wage growth when June's CPI figure is released tomorrow.
If inflation does jump back up after this weakening in pay growth, then it adds to the conundrum for the Bank of England's Monetary Policy Committee who are desperate to deliver a rate hike in August's MPC meeting. Higher inflation would support that position but an absence of sustained real wage growth as well as ongoing fears about the impact that Brexit will have on the UK economy means that we could see the 'unreliable boyfriend' make an appearance again if Mark Carney and the central bank is forced to make another U-turn come August.
9.56am BST
At the Treasury committee meeting, Bank of England governor Mark Carney says he is concerned the European Union has not yet indicated its solution to continuity in derivatives contracts after Brexit.
He said that a no-deal Brexit would have big economic consequences. But he said it was possible that an increase in financial services business from emerging markets could make up for any loss of EU activity.
9.52am BST
They have given up trying to stream the Treasury Select committee from Farnborough:
Livestream of Mark Carney at Treasury Select Committee at Farnborough now shut down because of "connectivity issues"
9.48am BST
Not everyone believes an August rate rise is a done deal, however. Ben Brettell, senior economist at Hargreaves Lansdown, says:
Today's numbers showed wage growth dipped slightly in the three months to May, to 2.7% excluding bonuses and 2.5% including them. Unemployment held steady at an ultra-low 4.2%, but the claimant count - the number of people claiming out-of-work benefits rose unexpectedly by almost 8,000. In a quirk of the data this number is a month more recent than the rest of the report, so could spell tougher times ahead.
Both sterling and the FTSE were little changed after the data was released.
9.46am BST
The jobs and wages figures will probably not deter the Bank of England from raising interest rates in August, says Jeremy Thomson-Cook, chief economist at WorldFirst:
At least one part of the UK economy is showing strength with employment hitting fresh 47 year highs in May. Slowing wage growth is unlikely to shade expectations that the Bank of England will raise interest rates on August 2nd although tomorrow's inflation numbers are expected to show that the real wage gains that consumers have been receiving for a few months now may peter out soon courtesy of higher oil prices and a weaker pound.
9.44am BST
Here is a chart showing the slip in wages growth:
9.33am BST
While the stream is down from Farnborough, over to the day's big UK data release.
Wages growth slipped to its weakest level in six months, rising by 2.5% in the three months to May compared to a 2.6% increase in the previous three months. Pay excluding bonuses came in at 2.7%. These were in line with analyst forecasts, and are above the inflation rate of 2.4%.
9.28am BST
Treasury Select Committee hearing on financial stability with BoE taking place at Farnborough Air Show. Judging by Twitter comments the poor signal that plagues the air show is also stopping the live streaming of the session for those who aren't here. pic.twitter.com/1OimL2HHtD
9.27am BST
Nicky Morgan now moves on to Brexit and derivatives, but the answers are impossible to hear. And the live stream has now died......
9.21am BST
Hilarious. Mark Carney and Bank bigwigs rabbiting on about technological resilience at Treasury Select Committee. We''re hearing about one sentence in five because the sound keeps cutting out on the livestream from Farnborough
9.16am BST
And we're off (with a rather poor audio signal from Farnborough). Chair Nicky Morgan asks about cyber attacks on the financial system as well as internal bank problems such as TSB and VIsa experienced.
However the signal keeps cutting out making the answers difficult to get...
Ooops. Treasury Select Cee at Farnborough, showingcasing all that's best in technnology. Livestream is audio only and keeps cutting out
"Two things. Cyber secur.... (buffering) .... which is why banks .... (buffering).. Two points (buffering) ... operational resilience ... (buffering)"
9.07am BST
Massive tension as hordes of YouTubers await the BoE hearing before Treasury Committee pic.twitter.com/ywWehoejAl
9.02am BST
The session with the Bank will be streamed live here.
8.59am BST
The Bank of England's financial stability report for June - which is what Carney and Co will be talking about shortly - warned that the EU was not doing enough to prevent disrupution to the financial system after Brexit. It said material risks remained to trillions of pounds worth of contracts.
8.31am BST
Is the pound likely to take more notice of the economic data, or the current political uncertainty? Kit Juckes at Societe Generale says:
The contrast between the economy, which fully justifies the market's belief that rates will rise in August, the politics, which is a shambles, is ever more striking. The Prime Minister has sacrificed aspect of her 'soft Brexit' strategy to get legislation through parliament, relying on Brexiteer Labour MPs in the process and damaging her own support in the process. Labour strategists are dreaming that she'll make the Conservatives unelectable for a decade or more. But does it matter for the pound? In the short run, the data probably matter more. In the long run, it just keeps sterling anchored near historic trade-weighted lows.
8.19am BST
Investors are clearly taking a back seat as trading begins in Europe.
Markets have made an unconvincing start, with the FTSE 100 losing 0.07%, Germany's Dax up 0.05%, France's Cac down 0.1% and Spain's Ibex 0.03% lower.
8.01am BST
More on the forthcoming UK data. Jasper Lawler, head of research at London Capital Group, said:
Brexit woes continue to keep the pound range bound, with too may uncertainties still unresolved regarding Brexit; deal or no deal and even over whether Theresa May will be able to cling onto power through the week. However, the UK economic calendar provides at least some distraction from Brexit concerns, this week, although it may not all be good news.
UK data out today is not expected to do much to support the downbeat pound, with the employment report forecast to paint a mixed picture of the labour market... UK unemployment is expected to remain constant at 4.2%, and 115k jobs are expected to have been created in the three months to May. Wage growth is expected to remain constant and earnings including bonuses is forecast to have slipped to 2.7% from 2.8% in April.
7.57am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
With Brexit concerns continuing, the latest comments from Bank of England governor Mark Carney will be monitored carefully this morning.
The Bank of England will get a final look at how well the UK economy is doing this week starting today with the latest unemployment and wages data. Since the Bank of England deferred a decision on raising rates in May the UK economy has rebounded strongly from the slowdown seen in Q1 with a strong performance seen across all the major sectors, raising expectations that the monetary policy committee may coalesce around a majority decision to raise rates in just over a couple of weeks' time.
This week's data could go some further in raising these expectations or dash them completely, unless Bank of England governor Mark Carney performs another one of his reverse ferrets this morning and pours cold water on the prospect when he speaks in Farnborough today, just prior to the release of this morning's data.
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