Earnings Expected to Increase Again in Britain Despite Brexit
The UK economy is contracting but earnings continue to surge. Who is taking all the earnings?
The UK economy has turned upside down as the economic data as shown in the recent months. The economy was holding on well in Q1, but in Q2 it contracted and many analysts now predict a recession this year. At least, two consecutive negative quarters.
The real economy, such as manufacturing, the industrial sector, construction and services, are all in contraction. Yet, the other part of the economy looks to be in great shape. The unemployment rate is at 3.8% which is a great level, below the 5% natural rate.
But what’s more puzzling is the fact that earnings continue to grow at considerable speed and the speed is getting stronger. Earnings increased from 3.1% in April to 3.4% in May as the report released last month showed.
Today they are expected to increase again by three points to 3.5% for June. This increase in earnings is really impressive even if the economy is growing pretty fast. So, it seems strange that earnings are growing at this pace now that the economy is contracting, as the GDP report for Q2 showed. Well, let’s see if earnings will meet expectations today. If they do, the GBP is likely to jump for a while, which would be a good opportunity to sell it.
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