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UK labor market continued to soften in July, with early payroll estimates showing employee numbers falling by -13,000 from June and by -94,000 from a year earlier. June’s monthly decline was also revised from -4,000 to -13,000, reinforcing gradual downtrend from 2024 peak.

ILO unemployment rate held at 4.9% in three months to June, slightly above 4.8% expected, although claimant count moved in opposite direction with an -11,000 decline versus expectations for a 16,500 increase.

Wage data were mixed. Regular earnings growth edged up from 3.4% to 3.5% y/y in April-June, above 3.4% consensus Total earnings growth slowed from 4.3% to 4.1%, matching expectations.

More timely payroll-based median pay growth also eased from 4.5% to 4.2% y/y in July, suggesting underlying wage momentum is gradually cooling despite firmness in regular pay.

Overall, employment conditions are weakening more clearly than wages. Payrolls continue to drift lower and unemployment remains elevated, but pay growth is proving slower to soften.

Data Summary

*June payroll decline was revised from -4K to -13K.

Key Takeaways

• UK payrolled employment fell another 13K in July, while June was revised to show the same decline, reinforcing gradual weakening from 2024 peak.
• Payrolls were 94K lower than a year earlier, equivalent to a 0.3% annual decline.
• ILO unemployment rate held at 4.9%, slightly above 4.8% consensus.
• Claimant count provided main positive surprise, falling 11K instead of expected 16.5K increase.
• Wage signals were mixed. Regular earnings growth firmed from 3.4% to 3.5%, while total earnings slowed from 4.3% to 4.1%.
• More timely median payroll pay growth eased from 4.5% to 4.2% in July.
• Overall picture is one of employment weakening faster than wages, with payrolls drifting lower but pay growth cooling only gradually.

Full UK labour market overview release here.

Australian consumer sentiment improved in August, with Westpac–Melbourne Institute Consumer Sentiment Index rising 83.9 to 88.9, a 6.0% monthly gain. Improvement was concentrated among mortgage holders and emerged almost entirely after RBA’s August 11 decision to keep rates unchanged. Current financial assessments led rebound, with family finances versus a year ago jumping 71.1 to 80.0, while time to buy a dwelling rose 85.4 to 95.7. Even so, headline index remains below neutral 100 and 9.7% weaker than a year earlier.

Forward-looking measures were less convincing. Family finances over next 12 months edged up 96.5 to 98.2, while expectations for economic conditions over next year rose 78.3 to 82.8. Unemployment Expectations Index deteriorated 129.9 to 135.7, moving above its long-run average, while House Price Expectations fell 118.0 to 110.8. Consumers also continue to anticipate tighter borrowing conditions: 59% expect mortgage rates to rise further, although RBA hold reduced uncertainty and lifted share expecting rates to stay unchanged or fall.

For RBA, survey shows August hold provided immediate relief without restoring confidence. Household pessimism, rising unemployment concerns and relatively subdued forward expectations suggest three hikes this year are still working through economy. Westpac argues Board is unlikely to have enough new evidence by September 28–29 meeting to conclude upside inflation risks have materialised, particularly with only one monthly inflation print ahead and labor market easing more than RBA had previously forecast. That keeps September tilted toward another hold even as Board retains explicit option to hike again.

Data Summary

Key Takeaways

• Australian consumer sentiment rebounded 6.0% in August, with headline index rising from 83.9 to 88.9.
• Improvement was concentrated among mortgage holders and emerged almost entirely after RBA’s August 11 hold decision.
• Despite rebound, sentiment remains firmly pessimistic, below neutral 100 and 9.7% lower than a year ago.
• Current financial conditions improved more sharply than forward-looking expectations, suggesting consumers felt immediate relief without becoming substantially more confident about outlook.
• Family finances versus a year ago jumped from 71.1 to 80.0, while time to buy a dwelling rose from 85.4 to 95.7.
• Labor-market anxiety increased, with Unemployment Expectations Index rising from 129.9 to 135.7, above its long-run average.
• House Price Expectations Index fell from 118.0 to 110.8, pointing to weaker housing-market confidence.
• 59% of respondents still expect mortgage rates to rise further, although RBA hold reduced uncertainty and increased share expecting rates to stay unchanged or decline.
• Survey supports case for RBA patience in September: households are responding to restrictive policy, while rising unemployment concerns argue against assuming economy can absorb another hike easily.

Full Australia Westpac Consumer Sentiment release here.

Canada inflation accelerated more than expected in July, with headline CPI rising from 2.8% to 3.0% y/y, above 2.9% consensus. Monthly CPI swung from -0.4% m/m to +0.5%, also stronger than 0.4% expected.

Gasoline was major driver, with annual price growth accelerating from 20.5% to 25.7% as Middle East conflict, Strait of Hormuz blockade and partial closure of Red Sea shipping routes pushed energy costs higher. Travel tours also contributed, while slower grocery inflation provided some offset.

Importantly, July report was not purely an energy story. CPI excluding gasoline held at 2.2% y/y for third consecutive month, while BoC core gauges all edged higher. Median CPI rose from 1.9% to 2.0%, matching expectations; Trimmed CPI increased from 1.8% to 1.9%, above 1.8% forecast; and Common CPI climbed from 2.6% to 2.7%, compared with 2.5% expected. That combination suggests underlying inflation pressure firmed even as gasoline accounted for much of headline acceleration.

Energy-driven headline inflation alone could potentially be looked through by the BoC, but simultaneous acceleration across core measures makes report harder to dismiss as temporary oil noise. Key question now is whether higher energy costs begin feeding more broadly into underlying prices, or whether softer domestic demand keeps second-round effects contained and allows BoC to maintain extended hold.

Data Summary

Key Takeaways

• Canada headline CPI accelerated from 2.8% to 3.0% y/y, above 2.9% consensus, while monthly CPI rebounded from -0.4% to +0.5%.
• Gasoline was major driver, with annual price growth accelerating from 20.5% to 25.7% amid Middle East conflict, Strait of Hormuz blockade and partial closure of Red Sea shipping routes.
• Travel tours also contributed to faster headline inflation, while slower growth in grocery prices provided some offset.
• Inflation was not purely an energy story. CPI excluding gasoline held at 2.2% for third straight month.
• BoC’s core gauges all firmed: Median rose from 1.9% to 2.0%, Trimmed from 1.8% to 1.9%, and Common from 2.6% to 2.7%.
• Trimmed and Common CPI both exceeded expectations, making July report more hawkish than headline gasoline surge alone would suggest.

Full Canada CPI release here.