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Still seeing high inflation, wage growth and job creation

UK DATA

From a monpol perspective, we are still seeing high inflation, high wage growth and strong job creation. So all the reasons the BOE are hiking are still reflected in this survey. There was a big pullback in expectations, but still not enough to derail the MNI Markets team's expectation that there is around a 60% probability of a 50bp hike in June (which is still less than the market prices).

  • "Despite weaker new business growth, the latest survey signalled a robust and accelerated rise in staffing numbers. Job creation was the fastest for three months, led by stronger hiring in the service sector."
  • "Worries about customer spending cutbacks and the impact of rapid inflation on the longer-term economic outlook led to another fall in business activity expectations. Optimism at UK private sector companies has declined in each month since February and is now the lowest for just over two years."
  • "Strong wage pressures added to cost burdens at private sector companies in June. Measured overall, input prices increased at a slightly slower pace than in May, but the rate of inflation was still the second-fastest since the index began in January 1998. Service providers typically noted higher salary payments, fuel costs and the impact of supply shortages. Manufacturers mostly cited higher energy costs and raw material prices, although the overall rate of purchase price inflation eased to a four-month low in June"
  • "Exceptionally strong cost pressures resulted in a steep increase in average prices charged in June. The rate of output charge inflation eased to its lowest since February, but remained higher than at any other time in the past two decades."
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From a monpol perspective, we are still seeing high inflation, high wage growth and strong job creation. So all the reasons the BOE are hiking are still reflected in this survey. There was a big pullback in expectations, but still not enough to derail the MNI Markets team's expectation that there is around a 60% probability of a 50bp hike in June (which is still less than the market prices).

  • "Despite weaker new business growth, the latest survey signalled a robust and accelerated rise in staffing numbers. Job creation was the fastest for three months, led by stronger hiring in the service sector."
  • "Worries about customer spending cutbacks and the impact of rapid inflation on the longer-term economic outlook led to another fall in business activity expectations. Optimism at UK private sector companies has declined in each month since February and is now the lowest for just over two years."
  • "Strong wage pressures added to cost burdens at private sector companies in June. Measured overall, input prices increased at a slightly slower pace than in May, but the rate of inflation was still the second-fastest since the index began in January 1998. Service providers typically noted higher salary payments, fuel costs and the impact of supply shortages. Manufacturers mostly cited higher energy costs and raw material prices, although the overall rate of purchase price inflation eased to a four-month low in June"
  • "Exceptionally strong cost pressures resulted in a steep increase in average prices charged in June. The rate of output charge inflation eased to its lowest since February, but remained higher than at any other time in the past two decades."