Surprise drop in UK unemployment to 4.7%

AI desk brief

UK unemployment unexpectedly fell to 4.7% in the three months to August from 4.9%, while payrolled employment rose by 13,000 to 30.3m. Vacancies fell to 691,000, the lowest since 2021, but average pay growth remains above inflation at 3.7%, keeping the Bank of England alert to sticky wage-driven inflation ahead of the 28 October budget.

The mix is modestly hawkish for rates: cooler vacancies and softer headline wage growth are offset by unemployment undershooting forecasts and pay still running above CPI. That should be a mild headwind for gold and silver via firmer UK rate expectations if markets read the data as reducing the urgency for near-term easing.