Insights 
VT 
The UK’s ILO unemployment rate for March remained steady at 4.5%, aligning with expectations. The previous month’s rate was 4.4%. Employment change was recorded at 112,000, which was slightly less than the expected 115,000, with a downward revision of the prior figure to 206,000.
Average weekly earnings increased by 5.5%, exceeding the anticipated 5.2%, though the previous figure was adjusted to 5.7%. When excluding bonuses, earnings rose by 5.6%, slightly less than the expected 5.7%, with the prior rate at 5.9%.
April Payroll Changes
April payrolls reflected a reduction of 33,000, with the prior data revised to show a decrease of 47,000, down from an earlier estimate of 78,000. These unemployment figures point to a continued weakness in the labour market, as payrolls decreased further in April.
Real earnings have shown a minor decline but still remain high. Despite inconsistencies in the data, the trend indicates no immediate pressure on policymakers at the Bank of England to implement a rate cut next month.
We’ve had a good look through the labour market numbers, and on the surface, they paint a picture that’s mostly aligned with broader expectations. The unemployment rate hasn’t moved much—it edged slightly higher, but barely enough to change the narrative. The slight tick up to 4.5% won’t cause too many raised eyebrows, particularly as the rise came alongside confirmed downward revisions to previously reported employment gains.
Average weekly earnings told a slightly different story. The figure excluding bonuses didn’t quite reach forecasts, whereas the overall average did manage to climb past them. But with both series seeing prior revisions lower, the take-home is that wage growth, while still elevated, is perhaps not accelerating the way once feared.
Then there’s the matter of monthly payrolls. April brought another net loss, and when we recheck March with the latest revisions, we see the drop wasn’t quite as deep as it looked initially—though still not a mark of strength. So, over the past two months, the direction is clear enough: job creation has softened.
Contextual Economic Insights
When we place all this into context, what emerges isn’t the sort of heat in the economy that typically discourages cutting rates. It’s more of a cooling period, with slightly weaker employment, moderated earnings momentum, and fewer signs of bottlenecks. None of this forces urgent action, and it suggests a degree of breathing space for decisions further down the line.
For those of us watching rates closely, especially through the lens of future volatility and implied curve shifts, the question is not whether conditions are firm—it’s how long the Bank feels it can observe without altering course. Based on current readings, one could infer there’s no justification for a sudden change to rhetoric, much less policy.
This current batch of data gives room—though limited—for slightly more speculative positioning. Still, it’s not about turning the boat; it’s about whether there’s an opening to lean into slightly steeper rates at the front end without inviting immediate correction. We’ll keep the forward vols on a tight leash for now, with implieds likely to drift as short-term pricing grows less reactive in absence of a new trigger.
We may find more clarity in coming wage data rather than from employment figures. With earnings now only marginally above headline expectations and prior months trimmed down, the pressure on rate setters to act based solely on inflationary wage risks appears to be retreating.
Gilts have responded quietly, which tells its own story. The market sees enough neutrality here not to make a move, and inactivity in the front end should be read not as complacency, but as measured patience. The bigger shift, if it comes, will require confirmation from further data—likely on prices. Until then, we continue watching from a distance, adjusting our positioning for premium where the curve permits and risks seem asymmetric.
