The U.K. labor market weakened further as jobless claims surged to a fresh record high of 32.5K from a revised reading of 27.8K in July. The claimant count rate increased as well, rising to 2.8% from 2.7%, which suggests that labor demands may deteriorate further over the coming months. Furthermore, the ILO unemployment rate ticked higher as firms continued to cutback on employment, rising to 5.5% from 5.4% in June. The bigger than expected rise in the unemployment figures suggests that economic activity may deteriorate further as firms cutback on employment, which could lead the BoE to reduce the benchmark interest rate by the beginning of next year. However, BoE Governor King stated last week that he expects upside wage pressures to ease over the coming months, but went on to say that inflation expectations have increased, which could fuel upside price pressures in the near future.
