On Tuesday, the FTSE 100 and European stocks experienced mixed results as the latest data revealed that UK wage growth has slowed to its lowest pace in two years. According to the Office for National Statistics (ONS), regular wage growth dropped to 5.1% year-on-year for the three months leading up to July. This figure marks the slowest growth rate since the quarter ending in July 2022.
While wage growth has decelerated, the UK’s unemployment rate showed a slight improvement. The ONS reported that the unemployment rate decreased to 4.1% in the three months to July, down from 4.2% in the previous quarter. However, this positive trend was marred by a significant rise in youth unemployment. The jobless rate for 18 to 24-year-olds climbed to 13.3%, its highest level in over three years, indicating increasing difficulties for young people entering the labor market.
In the financial markets, London’s FTSE 100 underperformed compared to its European peers, dropping 0.6% during afternoon trading. Germany's DAX also saw a decline, falling by 0.5%, while France’s CAC managed a modest gain of 0.1%. The pan-European STOXX 600 index edged down by 0.2%.
Meanwhile, Wall Street was set for a subdued opening, with futures for the S&P 500, Dow, and Nasdaq all showing minimal movement at the start of European trading.
On the currency front, the British pound saw a slight uptick, rising 0.1% against the US dollar to trade at 1.3090.
The slowdown in wage growth has sparked discussions about the possibility of further interest rate cuts by the Bank of England. As wage pressures ease, policymakers may consider adjusting rates to support economic stability and growth.
As these developments unfold, we will continue to monitor their impact on the markets and the broader economy.
