The number of Britons claiming jobless benefit fell sharply last month, but it was no surprise to markets after Prime Minister Tony Blair said on Tuesday he expected a "welcome" drop in unemployment.
Blair's remarks earned him a strong rebuke from National Statistician Karen Dunnell, who said they "clearly contravened" rules governing the use of official data. Investors homed in on news that average earnings growth picked up to a weaker-than-expected 4.4 percent in the three months to July, leaving it just below the Bank of England's 4.5 percent tolerance level.
The pound fell and British interest rate futures ticked higher as investors bet policymakers would be reassured that rising inflation is not yet feeding into workers' wages.
Still, analysts said the figures were unlikely to deter the central bank from raising interest rates to 5.0 percent before the end of the year, particularly after data this week showed inflation rising further above target.
"In total it points to a continued soft labour market, but it is not sufficient to dissuade the BoE from moving again and we factor in another rate hike in November," said David Page, economist at Investec.
Indeed, Wednesday's data showed earnings growth was at its highest in over a year and followed a report by the Recruitment and Employment Confederation which showed wage growth for permanent staff at its fastest in two years.
And with higher utility bills and university tuition fees expected to fuel inflation in the coming months, interest rate-setters may be keen to make a precautionary move.
Wednesday's data showed the number of people claiming jobless benefits fell by 3,900 in August, the biggest decline since January 2005. Blair - who like other senior ministers will have been privy to the data beforehand - was keen to trumpet the good news to the Trades Union Congress on Tuesday, landing him in hot water with the Office for National Statistics.
In a letter to Cabinet Secretary Gus O'Donnell on Wednesday, ONS head Dunnell said Blair had clearly breached National Statistics rules on how data is released.
"It is essential for the maintenance of the integrity of official statistics, and of public confidence in them, that the provisions of the code of practice are complied with fully," Dunnell wrote. Separate data showing a fall in the number of public sector workers should also alleviate concerns about wage pressure in this sector.
Public sector employment fell by 9,000 in the 12 months to the second quarter, with the number of workers in central government down by 2,000 and the number of civil servants down by 12,000 in the period.
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