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The market focus Tuesday was back on central banks, as a Bank of Japan policy meeting got underway and as the Bank of England was given food for thought in the form of UK jobs and wages data.
The FTSE 100 index opened down 11.63 points, or 0.2%, at 7,848.44. The FTSE 250 was down 64.87 points, or 0.3%, at 20,017.46, and the AIM All-Share was down 1.20 points, or 0.1%, at 862.79.
The Cboe UK 100 was down 0.1% at 785.49, the Cboe UK 250 was down 0.3% at 17,492.87, and the Cboe Small Companies was down 0.2% at 13,781.46.
The UK unemployment rate remained steady in November, according to the latest data from the Office for National Statistics, but average pay adjusted for inflation shrank at one of the fastest rates on record.
The unemployment rate was 3.7% in the UK in the three months from September to November, unchanged from the August to October period, but up from 3.5% in the June to August period.
The jobless rate was in line with market consensus cited by FXstreet.
‘The UK’s labour market remains very tight due to demand and supply constraints, although there are some tentative signs of loosening in the latest figures,’ said Daniel Mahoney, UK economist at Handelsbanken.
Annual growth in average total pay, including bonuses, and in regular pay, excluding bonuses, both were 6.4% in September to November period. This means pay continued to lag inflation in the UK. Consumer prices rose by 10.7% in November from a year before.
‘While average pay awards remain negative in real terms, they are at levels that are well above what would be consistent with the Bank of England meeting its 2% inflation target,’ Mahoney of Handelsbanken added. ‘It is also notable that public sector wage settlements are likely to further increase given they currently lag the private sector.’
For analysts at ING, the UK jobs market is, for the time being, the ‘biggest argument in favour of another 50 basis point hike by the Bank of England’ to combat inflation.
‘In reality, though, the February meeting rests on a knife edge, and there’s a clear chance the bank decides to mirror the Fed and slow the pace of rate hikes further now Bank Rate is well into restrictive territory. Tomorrow‘