Britain's unemployment rate falls to another record low — but real wage growth is still dropping

• Will Martin
 

• 7h
• 465

City workers cross London Bridge during the morning rush-hour in the City of London August 11, 2010.REUTERS/Paul Hackett

• Unemployment rate drops to 4.4% from 4.5%, marking its lowest level since comparable records begin in the 1970s.
• Employment rate hits a new record high of 75.1%.
• However, real wage growth declines, with wages growing just 2.1% against inflation of 2.6%.

LONDON —  Unemployment in the UK dropped to a new low in July, but real wage growth continued to fall as the impact of post-Brexit vote inflation hits the average British household,according to the latest numbers from the Office for National Statistics.

Headline unemployment dropped from 4.5% to 4.4% during the month, beating expectations that the rate would remain unchanged. In real terms, that means 57,000 fewer unemployed people in country in the month.

"Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.1%, both including and excluding bonuses, compared with a year earlier, the ONS said.

Inflation is currently running at 2.6%, meaning that wage growth, in real terms, fell by 0.5%, as the amount people earn cannot keep up with the rise in the price of their household expenditures.

"The employment picture remains strong, with a new record high employment rate and another fall in the unemployment rate. Despite the strong jobs picture, however, real earnings continue to decline," Matt Hughes, a senior labour market statistician at the ONS said in a statement.

Employment also hit a new high, the ONS said, with 32.07 million people in employment in the UK, a rate of 75.1% and the highest since records began.

Here is the ONS' chart:

ONS

Alongside declining real wage growth, productivity in the UK also continued to fall, albeit at a slower rate than so far this year.

"Output per hour – the Office for National Statistics’ (ONS) main measure of labour productivity – fell by 0.1% in Quarter 2. This compares with a fall of 0.5% in Quarter 1," the ONS said.

Here's the chart:

ONS

There is reason to be cheerful in Wednesday's numbers for some economists, with Nikesh Sawjani from Lloyds Bank noting:  "Today’s report shows that the UK labour market remained strong in the second quarter despite some signs of faltering economic momentum.

"With wage growth showing some tentative signs of picking up and headline inflation close to its peak, the squeeze on the consumer may be starting to ease."

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A $1.6 billion startup that's aiming to take business from Oracle just filed to go public

• Matt Weinberger
 

• 15h
• 9,424

From left, MongoDB cofounder Elliot Horowitz, and execs Michael Gordon, Dev IttychariaYouTube/devGeeK; MongoDB

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MongoDB, a database startup with over $300 million in venture capital financing, has confidentially filed to go public, reports TechCrunch.

At the time of its last private valuation in 2015, MongoDB was reportedly a $1.6 billion company. The Wall Street Journal reported in May that MongoDB had hired Goldman Sachs and Morgan Stanley to underwrite an IPO.

A change to SEC regulations took effect earlier this summer, allowing any company to confidentially file to go public — a move intended to jump start the IPO market. Previously, this option had only been available to companies under a certain size. 

Earlier this year, MongoDB CEO Dev Ittycheria told Crain's New York that the company was doing "nine figures" of revenue, with "double digit" growth. At the time, Ittycheria named Oracle as the company's biggest target. 

"We believe Oracle is incredibly vulnerable because they've lost the developer's heart and soul," said Ittycheria. 

If MongoDB does go public, it will be the seventh so-called "unicorn" startup to do so in 2017.

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Summer holiday nightmare: The pound is at a 7-year low against the euro

• Will Martin
 

• 7h
• 727

Time for a staycation? Reuters/Phil Noble

LONDON — British holidaymakers jetting off to Europe who haven't yet changed their money face misery, with the pound at a seven year low against the euro.

The pound dropped to its lowest level since 2010 on Wednesday —excluding a very brief period during last October's flash crash— as the strengthening single currency punishes the pound.

The euro/pound currency cross,which is generally how the two are measured against one another, briefly rose to £0.9141 during early trade on Wednesday. That marked the strongest the euro has been against the pound, bar the flash crash, since 2010.

That rally was quashed by the worst of the Eurozone debt crisis, which pushed the euro downwards.

The euro's recent rise against sterling illustrates the diverging economic fortunes of Britain and the eurozone since the Brexit vote. While the single currency area prospers — growth in Q2 exceeded expectations and ran at an annualised rate of 2.2% — the UK's currency is weak, growth is subdued and virtually all risks to the economic outlook are to the downside.

Here's the chart of the euro's rise:Markets Insider

Having hit that record low in early trade, sterling has recovered a little after the latest data from the Office for National Statistics showed that UK unemployment fell to its lowest level since 1975 at the last reading.

The euro has been on a tear against both the pound and the dollar so far in 2017, as investors take note of the improving fortunes of the bloc's economy. EU growth has recovered to its best levels since the eurozone debt crisis.

Meanwhile, the pound remains subdued thanks to British economic weakness and the uncertainty surrounding Brexit negotiations, both of which are expected to continue to negatively impact sterling.

Late last week analysts at Morgan Stanley forecast that the euro will be worth more than Britain's currency by the end of the first quarter of 2018.

In the bank's FX Overview paper at the end of last week, a team led by strategist Hans W. Redeker said that a combination of a stronger euro and a weakening pound will combine to make the euro more valuable than the pound for the first time in its history, and make it — in terms of pure value — the strongest major currency on the planet.

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