The UK jobless rate declined in the first quarter despite a slowdown in economic growth. At the same time, real wages growth remained weak in spite of rising inflation.

Data published by the National Statistics Office (NSO) showed that the UK unemployment rate fell to its lowest level in 42 years between January and March to 4.6 per cent. The unemployment rate fell from 5.1 per cent in the prior year and 4.7 per cent in the three months to February.

Average weekly earnings grew to 2.4 per cent yearly, in line with estimates. However, if bonuses are excluded, earnings rose to 2.1 per cent, the weakest increase since July 2016, suggesting a further squeeze on consumers’ real wages.

Meanwhile, European statistics agency Eurostat confirmed that inflation in the eurozone accelerated as anticipated in April. The final eurozone Consumer Price Inflation (CPI) reading for April was confirmed at 1.9 per cent, up from 1.5 per cent in March and in line with the European Central Bank’s target of “below, but close to two per cent”.

The core inflation rate, which excludes energy, food, alcohol and tobacco, accelerated to 1.2 per cent from 0.7 per cent in March. The core inflation rate was above the 0.7 per cent recorded in April 2016 and the highest since September 2013. If no significant declines in inflation are recorded next month, pressures to signal a shift in monetary policy will increase, while a sharp drop will reinforce the ECB’s caution over monetary policy.

Finally, in the US, a report published by the Federal Reserve showed that US industrial production expanded in April at the fastest pace since February 2014 while recovering from a downturn in March. The Federal Reserve said that industrial production rose by 1.0 per cent in April following a revised 0.4 per cent gain in March which was initially reported at 0.5 per cent.

On the other hand, manufacturing output rose by 1.0 per cent in April after a 0.4 per cent drop in the prior month with an annual increase of 1.7 per cent.

This report was compiled by Bank of Valletta plc for general information purposes only.