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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

US inflation eases to 3.1%; UK wage growth slows and vacancies drop – business live

United Kingdom United States Inflation Office for National Statistics The Bank of England Bank of England Interest Rates
People shop at Macy's last month.
People shop at Macy's last month. Photograph: Yuki Iwamura/AFP/Getty Images

Closing summary

Time for a recap

US inflation has edged down to 3.1% in November, as inflationary pressures ease in the American economy.

On a monthly basis, prices rose by 0.1% last month, despite a drop in energy prices.

And core inflation, which measures underlying price pressures, rose by 0.3% in the month and remained at 4% per annum.

Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin, says:

“US inflation data is broadly in line with expectations, with headline inflation slowing and core inflation steady at 4% on a year-on-year basis. The large disinflationary impact has already happened with the drop in energy prices and goods prices, so the last mile to 2% will be more gradual.

Services inflation remains sticky, as the labour market remains resilient. Going forward, we expect inflation to continue slowing as the labour market softens, but with bumps along the way. Rent inflation will be a big part of the puzzle, but leading indicators from more timely rents indices suggest things are cooling into 2024.

The inflation data makes it likely that the US Federal Reserve will leave US interest rates on hold at its meeting tomorrow:

In other news:

Pay growth in the UK has slowed, with average total pay growth dropping to 7.2% in the three months to October, from 8% a month ago.

With the economy stagnating, the Office for National Statistics said a marked decline in earnings growth in the three months to October had coincided with jobs becoming harder to find.

Workers have been warned to expect lower pay rises:

UK mortgage arrears have hit a six-year high in the three months to September, as high borrowing costs left more households struggling to meet their payments.

Phone, broadband and pay-TV companies will be banned from imposing inflation-linked price rises in the middle of a contract and must instead tell customers upfront and in “pounds and pence” about any price rises, under rules proposed by Ofcom.

Unilever, the maker of Marmite, Domestos and Vaseline, is to be investigated by the UK’s competition watchdog over concerns that consumers are being misled by the company’s “green” claims on some essential household products.

In a busy day for regulators, the FCA has warned investment platforms that they cannot retain interest on clients’ cash holdings if they’re also charging a fee to hold that cash.

And the rail regulator has fired a warning shot at purveyors of overpriced pasties and baguettes on Britain’s stations, suggesting that captive passengers are paying 10% over the odds in a stagnant market.

In the auto industry, France’s Renault has said it will sell 5% of its shares in Nissan, the first step in a plan to rebalance a troublesome partnership with the Japanese carmaker.

One of Britain’s biggest power grid projects has awarded contracts worth £1.8bn for a 190km subsea electricity superhighway to bring renewable power from Scotland to the north of England.

Updated

Yellen: Inflation is coming down 'meaningfully'

US treasury secretary Janet Yellen said on Tuesday she believes inflation is coming down “meaningfully”.

And with inflation expectations under control it should not be particularly difficult to finish the “last mile” of the job of easing price pressures, she argues.

“I see no reason, on the path that we’re currently on, why inflation shouldn’t gradually decline to levels consistent” with the Federal Reserve’s 2% target, Yellen said at the Wall Street Journal’s CEO Council Summit.

The economy continues to operate a “roughly full employment,” she said (via Reuters).

Digging into today’s US inflation report, we can see that US food inflation was 2.9% in the year to November, while ‘food at home’ inflation was 1.7%.

Cereals and bakery products cost 3.4% more than a year ago, while dairy and related products were 1.4% cheaper than in November 2022.

But food-away-from-home (restaurant purchases) were 5.3% more expensive than a year ago.

Updated

Here are some handy charts to show today’s US inflation report, from Nick Timiraos of the Wall Street Journal:

With US core inflation remaining persistent, US interest rates may not fall as fast as the financial markets expect.

So predicts Ryan Brandham, Head of Global Capital Markets for North America at Validus Risk Management, who says:

“The figure for US Consumer Price Index came in largely as expected, with month-on-month coming in slightly higher. The market is already pricing in over four interest rate cuts in 2024.

However, considering that Core Consumer Price Index remains at 4%, there is risk that these cuts may not come as rapidly as the market expects. The Fed needs to see sustained decrease in inflation before taking significant action.

Despite today’s release closely aligning with expectations, the market reaction may be muted today, as focus shifts to the upcoming FOMC meeting tomorrow.”

Although core US inflation was unchanged, at 4%, on an annual basis, it has crept higher on a monthly basis.

The index for all items less food and energy rose 0.3 % in November, after rising 0.2% in October, today’s inflation report shows.

This “slightly stronger” rise in core consumer prices in November will buy the US Federal Reserve a little more time to keep interest rates at their current levels, predicts Andrew Hunter, deputy chief US economist at Capital Economics.

But, Hunter adds, “sharper declines in inflation are still likely to result in rates being cut aggressively next year”.

John Leiper, chief investment officer at Titan Asset Management, says:

“Core and headline US inflation came in broadly in-line with expectations, with a slight pick-up during November, driven by shelter.

With core inflation at 4% this isn’t the best news but, equally, will do-little to derail the prevailing narrative that peak rates are in.

With predictions for a soft economic landing in the ascendancy, US equity futures are responding positively to the news.”

Shelter prices, a measure of US housing costs, rose by 6.5% per year in November, today’s inflation report shows.

Richard Garland, chief investment strategist at Omnis Investment, says US inflation is on track to fall to the 2% target by the end of next year.

Garland says this should encouraage the Federal Reserve to leave interest rates on hold tomorrow:

“US inflation is on a clear and sustained downward trend, which absent unforeseen shocks should be within shouting distance of the Fed’s target by the end of 2024.

Before that time, the Fed should be able to determine that policy is tighter than the economy requires. Concern about lingering inflation expectations and their own reputation may prevent them from easing as fast as markets currently expect, but nonetheless the direction of travel is fairly clear.

Certainly there is no danger of an increase in interest rates on Wednesday.”

The drop in US inflation last month underlines that inflationary pressures are easing in advanced economies.

At 3.1%, US CPI is higher than in the eurozone (where inflation fell to just 2.4% in November).

We get the UK’s latest inflation report next week – in October, UK inflation was 4.6%.

US inflation eases to 3.1%

Newsflash: US inflation has dipped a little, as the cost of living squeeze in America continues to ease.

The US CPI index shows that consumer prices rose by 3.1% in the year to November, data just released shows – meeting market expectations.

That’s down from 3.2% in the year to October.

Core inflation (which strips out food and energy) was unchanged at 4.0% per year, again as expected.

The energy index decreased 5.4% for the 12 months ending November, while the food index increased 2.9% over the last year.

On a monthly basis, prices rose by just 0.1% during November, while gasoline prices fell by 6% during the month, due to cheaper oil prices.

The data comes a day before the US Federal Reserve sets interest rates for the final time this year.

Updated

Investors across the globe are bracing for the latest US inflation report, due in around 15 minutes at the half-hour.

The markets are expecting another slowdown in rising prices in November, with US consumer prices index forecast to slow to +3.1% per year, down from 3.2% before.

David Morrison, senior market analyst at Trade Nation, says:

Markets will be cock-a-hoop if it comes in at 3% or below. But they’re unlikely to react well to anything above 3.2%.

Traders will also be watching core inflation, which is expected to remain at 4%.

Getting back to this morning’s UK jobs report, the Resolution Foundation says most indicators suggest wage growth will continue to cool.

Louise Murphy, economist at the Resolution Foundation, explains:

“The UK’s historically high level of pay growth over the summer has been a major concern for policy makers, as it risks keeping inflation higher for longer for everyone.

“But just as price pressure fell back sharply in October, so too has pay growth, as the big rises from earlier in the year fall out of the data. This will reassure Bank of England policy makers seeking to bring inflation down.”

And here’s Resolution’s Hannah Slaughter:

Updated

Rail passengers in Scotland have been warned to expect disruption after managers at ScotRail voted in favour of industrial action in a long-running dispute over on-call working.

Rail union TSSA says managers working in Operations Team Manager and ScotRail Operations Manager grades have voted by 70% in favour of taking strike action.

The dispute relates to on-call working, and dates back to 2021.

TSSA General Secretary Maryam Eslamdoust says ScotRail’s offer to staff does not address crucial issues including pay levels, adding:

“Our members don’t vote lightly for strike action. But ScotRail have acted in bad faith throughout the dispute and enough is enough.

“The ball is in ScotRail’s court now. If they want to avoid strike action they need to get back round the table with us and make an offer our members can accept. Otherwise we’ll see them on the picket line!”

French and German stock markets hit record highs

France and Germany’s stock markets have both hit record highs today, as European shares enjoy a pre-Christmas Santa Rally.

In Paris, the CAC-40 climbed as much as 0.4% to a record high of 7,582.47 points this morning.

Frankfurt’s DAX index also touched a new peak, of 16,837 points today.

Fawad Razaqzada, market analyst at City Index and FOREX.com, says expectations of eurozone interest rate cuts have been pushing up shares:

Persistent weakness in economic data has led traders to anticipate an European Central Bank (ECB) rate cut next year, driving the DAX to attain new record high in recent days, in what has been one of the strongest bullish trends.

Similar to the Federal Reserve, a somewhat dovish stance from the ECB may be necessary to justify the market’s reassessment for potential cuts. However, if the ECB does not signal such a move in the upcoming week, this could strengthen the euro and possibly hurt gold.

Updated

UK bond prices jump on rate cut hopes

UK government bond prices are rallying today, as investors anticipate UK interest rate cuts next year.

Following today’s drop in wage growth, the yield (or interest rate) on 2, 10 and 30-year UK bonds have all fallen.

Ten-year gilt yields are down over 11 basis points today, at 3.57%. Yields fall when bond prices rise, which indicates the City is anticipating the Bank of England to cut borrowing costs in 2024.

Ellie Henderson, economist at Investec, says:

We do not think there is anything in today’s report that will alter the collective thinking on the MPC ahead of the decision on Thursday (we expect the MPC to keep the Bank rate on hold at 5.25%), or anything to dissuade us from our own view that the first rate cut in this cycle will be slightly later than markets are expecting, starting next August.

German economic confidence lifted by rate cut hopes

Over in Germany, economic confidence has picked up a little despite recession fears and the budget crisis gripping Berlin.

The ZEW institute’s indicator of Economic Sentiment for Germany has risen by 3 points this month, to 12.8 points.

Investors are slightly less gloomy about the economic situation, with this indicator rising by 2.7 points – but still languishing at -77.1 points.

Hopes of interest rate cuts in 2024 are lifting the mood, says ZEW President Professor Achim Wambach:

“Despite the current budget crisis, the assessment of the situation and economic expectations for Germany have once again slightly improved. This is due to the fact that the share of respondents expecting interest rate cuts by the ECB in the medium term has doubled.

This, in turn, is good news for the German construction industry, for which we observe significantly more optimistic expectations this month. Likewise, the share of respondents expecting inflation rates to fall further is decreasing.”

Value of UK mortgages in arrears jumps

The total value of UK mortgages in arrears has jumped by over 40% compared with a year ago, new data from the Bank of England this morning shows.

The value of outstanding mortgage balances with arrears has increased to £18.8bn in July-September. That’s 44.0% higher than a year earlier, and an increase of 11.4% from the previous quarter’s £16.9bn.

The BoE’s data also shows that the proportion of mortgages in arrears, as a share of total lending, has hit a six-year high – up from 1.02% to 1.14%, the highest since the second quarter of 2017.

Arrears are defined as the borrower failing to make contractual payments equivalent to at least 1.5% of the outstanding mortgage balance, or where the property is in possession.

In June, chancellor Jeremy Hunt announced that struggling homeowners will get a 12-month grace period before their home is repossessed as part of a new “mortgage charter” struck with lenders.

And today’s data shows that the number of new arrears cases decreased by 0.3 percentage points in July-September, quarter-on-quarter, to 15.8% of the total outstanding balances with arrears. That’s still 5.1 percentage points higher than a year earlier, though.

A graph showing UK mortgage arrears
A graph showing UK mortgage arrears Photograph: Bank of England

Nationwide warned last month that mortgage arrears are rising, as higher interest rates and inflation hit household finances.

Karen Noye, mortgage expert at Quilter, says the increase in outstanding mortgage balances with arrears is worrying, adding:

The nation are struggling desperately with sky high mortgage, food and energy costs and sadly some are falling behind.

Updated

The slowdown in regular wage growth to 7.3% is not a surprise, argues Professor Costas Milas of the Management School at Liverpool University.

He tells us:

The latest public expectations of inflation over the coming year have gone down from 3.6% in August 2023 to 3.3% now.

This should ease demands for higher inflation and therefore provide the BoE with a good reason to lower its policy rate to 5% by March 2024, that is, earlier than most economists predict.

Notice, however, that what matters for workers is real wage growth rather than nominal wage growth. With inflation expected, currently, by the Bank of England, to drop (based on the “mode” or most likely outcome) to 3.1% by 2024Q4, my expectation is that real wage growth will converge, by that time, to UK’s historical average (since…1209!) of 1%. In other words, by late 2024, nominal wage growth should drop to about 4.1%.

FTSE 100 hits eight-week high

Stocks in London have hit their highest level in eight weeks, as investors brace for the latest US inflation data due later today.

The FTSE 100 index has climbed by 57 points, or 0.77%, this morning to 7,603 points.

That’s the blue-chip index’s highest level since 18 October, and comes after Wall Street closed at its highest level of the year last night.

Investors are calculating that if this morning’s drop in UK wage growth continues, the Bank of England could start to cut rates sooner rather than later in 2024, says Danni Hewson, head of financial analysis at AJ Bell.

She adds that the US inflation report will give clues as to how America’s central bank, the Federal Reserve, might act.

“US data later today will be watched closely by investors with expectations for the annual pace of inflation to slow from 3.2% to 3.1%. Core inflation is expected to remain steady at 4%, twice the level desired by the Federal Reserve over the long term.

Core inflation excludes energy and food costs and is expected to show a small increase from 0.2% in October to 0.3% in November, somewhat muddying the water for a narrative desired by investors that shows inflation gradually easing.

Max Mosley, senior economist at NIESR, predicts wage growth “will remain elevated in the upcoming period,” saying:

Today’s data show that average weekly earnings, excluding bonuses, rose by 7.3 per cent in August to October 2023 and by 7.2 per cent with bonuses, which is affected by one-off civil service bonus payments.

While this remains high and well above historical averages, it has only recently started to outpace inflation.

Taking price rises [based on the CPIH inflation measure] into account, total regular pay grew by 1.4 per cent and by 1.3 per cent including bonuses over the same period, meaning that workers have only recently seen their pay catch up with prices after a prolonged period of falling real wages.

Furthermore, the experimental labour market data suggest that the unemployment rate remained unchanged at 4.2 per cent, while the number of job vacancies fell by 45,000 in the three months to November. Overall, these figures indicate that labour market continues to loosen at a slow pace and wage growth will remain elevated in the upcoming period.”

Full story: UK pay growth drops sharply as job vacancies fall

Pay growth in the UK is falling sharply amid signs that jobs are becoming harder to find in a stagnant economy, our economics editor Larry Elliott reports.

In its latest health check on the labour market, the Office for National Statistics said growth in total average earnings had dropped from 8% to 7.2% in the three months to October – a much bigger drop than the financial markets had been predicting.

Meanwhile, the number of job vacancies continued to fall, declining by 45,000 to 949,000 at a time when growth stalled.

The level at which pay is increasing is being closely monitored by Bank of England policymakers to gauge inflationary pressure in the economy and the latest figures will ease fears at Threadneedle Street of a wage-price spiral.

More here.

Investors are anticipating that the Bank of England will make its first interest rate cut by next June, from 5.25% to 5%.

The BoE is widely expected to leave rates on hold on Thursday, at its final scheduled meeting of the year.

Chris Beauchamp, chief market analyst at IG Group, says:

UK workers continue to benefit from above-inflation pay rises, but the slowdown in wage growth might also give hope that the BoE can think more positively about cuts in rates next year, should inflation continue to come down.

While there is almost no chance of them acknowledging the possibility on Thursday, maybe today’s wage figures will allow them to think about entertaining it at some point.

Hargreaves Lansdown and AJ Bell shares slide as regulator demands 'double dipping' clampdown

Another regulator is also baring its teeth this morning.

The Financial Conduct Authority (FCA) has issued a warning to investment platforms over the practice of charging to hold people’s cash and then also accruing interest on it.

Rising interest rates have made this practice, known as “double dipping”, more lucrative – and the FCA has told firms to cease it.

The watchdog has surveyed 42 firms and found the majority retain some of the interest earned on these cash balances.

Sheldon Mills, executive director of consumers and competition at the FCA said:

“Rising rates mean greater returns on cash. Investment platforms and SIPP operators need now to ensure how much of the interest they retain and, for those who are double dipping, how much they’re charging customers holding cash, results in fair value. If they cannot make that case, they need to make changes.

“If they don’t, we’ll intervene.”

Shares in Hargreaves Lansdown have dropped by 8.6% in early trading, while AJ Bell are down over 9%.

Updated

UK regulators investigating Unilever's green claims

Consumer goods giant Unilever is facing scrutiny over the environmental claims it makes about some of its household products, such as cleaning products and toiletries.

The Competition and Markets Authority has announced it will examine the ‘green’ claims made by Unilever to make sure shoppers aren’t being misled

The CMA says it is concened that Unilever may be overstating how green certain products are through the use of vague and broad claims, unclear statements around recyclability, and ‘natural’ looking images and logos.

Unilever’s brands include Persil washing powder, Domestos bleach and CIF cleaning products.

Sarah Cardell, chief executive of the CMA, said:

Essentials like detergent, kitchen spray, and toiletries are the kinds of items you put in your supermarket basket every time you shop. More and more people are trying to do their bit to help protect the environment, but we’re worried many are being misled by so-called ‘green’ products that aren’t what they seem.

So far, the evidence we’ve seen has raised concerns about how Unilever presents certain products as environmentally friendly. We’ll be drilling down into these claims to see if they measure up. If we find they’re greenwashing, we’ll take action to make sure shoppers are protected.

Ofcom proposes ban on inflation-linked mid-contract price rises

In other news… Mobile phone providers could be banned from linking mid-contract price rises to runaway inflation figures under new proposals from the communications regulator.

In a win for consumers, Ofcom said this morning that phone, broadband and pay-TV companies must tell customers upfront and in “pounds and pence” about any mid-contract price rises.

The regulator is now proposing a ban on inflation-linked mid-contract price rises, warning that the practice risks undermining competition.

It is concerned that inflation-linked mid-contract price rises do not provide enough clarity about the prices people will pay, and hamper their ability to shop around for a better deal.

Melanie Dawes, the Ofcom chief executive, said:

“At a time when household finances are under serious strain, customers need prices to be crystal clear. But most people are left confused by the sheer complexity and unpredictability of inflation-linked price rise terms written into their contract, which undermines customers’ ability to shop around.

Here’s the full story:

As we reported in June, the UK’s largest mobile and broadband companies have been accused of fuelling “greedflation” after they pushed through the biggest round of price hikes for more than 30 years, linked to rising prices.

Updated

Union: The fight for better pay is not over

Unions are concerned that there’s “no festive cheer in latest earnings data”, given the slowdown in pay growth.

Unite the union’s general secretary, Sharon Graham, said:

“Although collective bargaining is delivering higher wagers for our workers - with Unite securing hundreds of millions through negotiations - these improvements are being undermined by high inflation rates.

“Moreover, it’s abhorrent that millions of workers are forced to stretch their payslips to simply live, while big corporations continue to fill their coffers. The battle to push up pay is therefore far from over, and we will carry on fighting to secure better pay, jobs and conditions for workers throughout the country.”

TUC general secretary Paul Nowak says the UK economy remains in “dire straights”.

“Pay growth slowed in October with real wages still worth less than in 2008.

“And unemployment is 200,000 higher than a year ago with vacancies falling for the seventeenth consecutive period.

Alexandra Hall-Chen, principal policy advisor for employment at the Institute of Directors, says:

‘Although today’s data shows a slight decline in job vacancies, demand for labour remains strong.

Our own data shows that skills and labour shortages are consistently cited by business leaders as a significant pain point. These shortages drive inflation and inhibit business’ ability to grow.

In light of the government’s recently announced measures to reduce economic migration to the UK, measures to increase domestic labour supply are urgently needed to prevent these shortages from becoming more acute.’

Parliament will vote on the government’s safety of Rwanda bill this evening. Rishi Sunak is trying to persuade Conservative MPs to back the legislation, which has been criticised by both wings of the party….

Minister for Employment, Jo Churchill MP, says:

‘This year the number of employees on payroll reached a record high in the UK Labour Market – up over 300,000 on the year’

‘Our transformational Back to Work plan with £2.5 billion will help thousands more people access the wide ranging benefits of work and boost our economy’.

That payroll total is estimated to have dropped a little in November, down 13,000, to 30.2 million – but this data is often revised by the ONS.

Liz Kendall MP, Labour’s Shadow Work and Pensions Secretary, says:

“Today’s figures once again lay bare 13 years of Conservative economic mismanagement that is failing Britain.

We are the only G7 country with an employment rate that hasn’t returned to pre-pandemic levels and a record number of people are now locked out of work due to long term sickness. It’s bad for them, it’s bad for business and it’s bad for the taxpayer too.

Labour’s plan to get Britain working will tackle the root causes of economic inactivity by driving down NHS waiting lists, reforming social security, making work pay and supporting people into good jobs across every part of the country.”

Pay is growing fastest in the finance and business services sector, the ONS reports, where it rose by 8.3% in the August-October quarter.

That was followed by the manufacturing sector, where pay is up 7.4% year-on-year.

Bank of England expected to hold rates on Thursday

Richard Carter, head of fixed interest research at Quilter, says the Bank of England will want to see further cooling in wage growth before it starts to cut interest rates:

“This dip in pay suggests the Bank of England’s previous interest rate decisions are beginning to have the desired effect and it will likely feel vindicated to continue to hold rates higher for longer as a result.

Though today’s figures suggest another step has been taken in the right direction, the Bank will be keen to see a significant slowdown in wage growth before it begins to contemplate the possibility of cutting interest rates.

Today’s data suggests a looser labour market is starting to translate into slower pay growth, says Jake Finney, economist at PwC UK.

Finney predicts that this will encourage the Bank of England to leave interest rates on hold at their current 15-year high of 5.25%, saying:

“Despite slower pay growth, inflation-adjusted pay is still growing on a year-on-year basis. This is because headline inflation is falling back at a faster rate. Our modelling indicates that the worst of the living standards squeeze is over for the average household. However mortgaged households will continue to face the squeeze from higher interest payments as fixed-rate mortgages face renewal.

“Signs of labour market cooling will provide some reassurance to the Bank of England Monetary Policy Committee, who meet again on Thursday. With no major surprises in the economic data over the past four weeks, rates are likely to remain unchanged. Policymakers are expected to stress that rates will need to remain in restrictive territory for some time.”

The Chancellor of the Exchequer, Jeremy Hunt, has issued a brief statement outlining the government’s efforts to support employment:

“It’s positive to see inflation continue to fall and real wages growing.

At the Autumn Statement, I announced an ambitious set of measures to get more people into work and boost economic growth. This includes a significant expansion of health support and an over £9bn per year tax cut for employees and the self-employed, worth over £450 for the average worker,”.

Updated

ONS: some signs that wage pressure might be easing overall.

ONS director of economic statistics Darren Morgan says there are signs that the pressure lifting UK earnings may be easing:

“Our labour market figures continue to show a largely unchanged picture, with the proportions of people who are employed, unemployed or who are neither working nor looking for a job all little changed on the previous quarter.

“Job vacancies fell again. This is now the longest period of decline on record, longer than in the immediate aftermath of the 2008 downturn. Nevertheless, the number of vacancies still remains well above its pre-pandemic level.

“While annual growth in earnings remains high in cash terms, there are some signs that wage pressure might be easing overall. However, as inflation has been falling more quickly, pay continues to grow in real terms.”

Introduction: UK wage growth slows

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK wage growth has slowed, and vacancies have dropped again, as Britain’s labour market cools in the face of a weak economy and high interest rates.

New data just released by the Office for National Statistics show that average basic pay (excluding bonuses) grew by 7.3% per year in the August-October quarter. That’s down from 7.8% growth a month ago.

Including bonuses, pay growth was slightly slower – up 7.2% year-on-year. Again, that’s quite a slowdown on the 8% total pay growth a month ago, and a larger fall than expected.

Wages are still rising faster than inflation, though. In real terms, both basic and total pay grew by 1.2% – once you account for rising prices.

But today’s data suggests the jump in nominal wage growth earlier this year is fading, just as households face the Christmas spending squeeze.

This may cheer the Bank of England as it prepares to set interest rates on Thursday, as it suggests that high borrowing costs are cooling the economy, and preventing a wage-price spiral breaking out.

Annual average regular earnings growth for the public sector was 6.9% in August to October 2023, which is one of the highest rates since the ONS’s data began in 2001.

Annual average regular earnings growth for the private sector was 7.3%.

The ONS also reports that vacancies in the UK fell by 45,000 on the quarter to 949,000.

This is the 17th consecutive fall in a row – the longest run on record, but it still leaves vacancies above their pre-Covid-19 levels.

The ONS also reports that the number of payrolled employees in the UK for November is estimated to have dropped slightly, down 13,000 to 30.2 million.

And due to problems with the ONS’s data-gathering, it is continuing to produce estimates for unemployment and employment rates.

They show:

  • the UK employment rate (for those aged 16 to 64 years) was largely unchanged on the quarter at 75.7%

  • the UK unemployment rate (for those aged 16 years and over) was largely unchanged on the quarter at 4.2%

  • the UK economic inactivity rate (for those aged 16 to 64 years) was largely unchanged on the quarter at 20.9%

Also coming up today

The final US inflation report of 2023 is due this afternoon, which may cement – or undermine – market expectations for interest rate cuts in 2024.

Annual US inflation is expected to tick down to 3.1% from 3.2%, while core inflation is expected to remain unchanged at 4.0%.

Tony Sycamore, market analyst at IG, says:

Should core CPI come in at or above 4.2% YoY, equity traders will likely rush to hit the sell button first and ask questions later.

Should core CPI print at 3.9% or less, it would be the green light for equity markets to extend gains into year-end.

The agenda

  • 7am GMT: UK labour market report

  • 10am GMT: ZEW survey of German and eurozone economic sentiment

  • 10.15am GMT: MPs on Treasury Committee to question FCA leadership

  • 11am GMT: NFIB index of US small business optimism

  • 1.30pm GMT: US inflation report for November

Updated

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