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London midday: FTSE stays down as wage growth slows

(Sharecast News) - London stocks were still a little lower by midday on Tuesday as investors mulled a slowdown in UK wage growth and looked ahead to a key US inflation reading. The FTSE 100 was down 0.2% at 7,556.31.

According to data from the Office for National Statistics, the UK unemployment rate eased at the end of last year, while average earnings continued to rise.

The unemployment rate was 3.8% for those aged 16 and over in the three months to December. That was down on November's rate of 4.2% and below consensus for 4.0%.

The economic inactivity rate was 21.9%, up from 20.9% in November. The ONS said the increase was driven by the number of people who are long-term sick, which remains at "historically" high levels.

The claimant count for January increased by 14,100 on the month, or by 61,200 on the year, to 1.579m. The employment rate was 75.0%.

Vacancies, meanwhile, fell by 26,000 in the quarter to 932,000. It is the nineteenth consecutive month vacancies have fallen, although they still remain above pre-pandemic levels.

Wage growth beat forecasts. Annual growth in employees' average regular earnings, excluding bonuses, was 6.2%, in contrast to consensus for 6.0%. Including bonuses, wages grew by 5.8%.

Both measures were down on November, however, when total pay rose by 6.7% and regular pay by 6.6%

Annual growth in real terms, which is adjusted for inflation, for total pay in December was 1.4% and 1.8% for regular pay.

A total of 108,000 working days were lost in December because of labour disputes.

The ONS is currently changing its methodology, after too few people responded to the surveys. It therefore noted that Labour Force Survey estimates should be treated with "additional caution" because of the smaller sample sizes.

Craig Erlam, senior market analyst at Oanda, said: "The UK is continuing to make progress toward being able to cut interest rates but as has been the case throughout the last couple of years, the process is far from straightforward.

"The good news is that wage growth is slowing at a good pace after peaking last summer and near-term trends are very promising. The bad news is that the labor market remains very tight and it's still highly uncertain whether wage growth will fall to a level consistent with 2% inflation soon.

"Then there's the unemployment rate which fell to 3.8% but is no longer reliable as a sole indicator. At a time when the BoE would like absolute clarity on the labor market, it's left to piece together a variety of data and surveys to form a judgment. Not ideal when central banks everywhere are petrified to move too early and risk stoking inflationary pressures again."

Still to come on the macro front, the US consumer price index for January is due at 1330 GMT.

In equity markets, travel firm TUI rallied as it reported a positive quarterly underlying profit for the first time after a record performance in the first quarter, and reiterated its guidance for the full year.

The company booked underlying earnings before interest and tax of €6m for the three months to 31 December, moving into the black for the first time since the merger of TUI AG and TUI Travel PLC in 2014.

Group revenues were up 15% year-on-year at €4.3bn, driven by higher demand at improved rates and prices, the company said.

Aston Martin Lagonda rose after executive chairman Lawrence Stroll confirmed the luxury car maker is in talks with bankers to address a looming debt pile, with the company's near-term liabilities amounting to around $1.4bn.

In broker note action, GSK gained after an upgrade to 'buy' from 'neutral' at Citi.

Market Movers

FTSE 100 (UKX) 7,556.31 -0.23% FTSE 250 (MCX) 19,105.07 -0.51% techMARK (TASX) 4,359.25 -0.66%

FTSE 100 - Risers

Centrica (CNA) 136.35p 1.41% BP (BP.) 484.65p 1.08% GSK (GSK) 1,643.20p 1.03% AstraZeneca (AZN) 9,591.00p 0.95% Lloyds Banking Group (LLOY) 41.74p 0.82% Smith (DS) (SMDS) 321.90p 0.75% Anglo American (AAL) 1,764.20p 0.72% Endeavour Mining (EDV) 1,331.00p 0.60% Severn Trent (SVT) 2,510.00p 0.60% Rio Tinto (RIO) 5,387.00p 0.60%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 784.40p -2.78% Sage Group (SGE) 1,143.00p -2.72% Rolls-Royce Holdings (RR.) 301.00p -2.62% Relx plc (REL) 3,249.00p -2.58% Rightmove (RMV) 538.20p -2.46% Intermediate Capital Group (ICP) 1,764.50p -2.43% Frasers Group (FRAS) 804.00p -2.25% Diploma (DPLM) 3,316.00p -2.07% WPP (WPP) 762.20p -2.03% Intertek Group (ITRK) 4,328.00p -1.99%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 178.10p 2.24% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 269.50p 1.70% JPMorgan Japanese Inv Trust (JFJ) 514.00p 1.58% Telecom Plus (TEP) 1,436.00p 1.41% Diversified Energy Company (DEC) 920.00p 1.38% Caledonia Investments (CLDN) 3,400.00p 1.34% Elementis (ELM) 137.80p 1.32% HarbourVest Global Private Equity Limited A Shs (HVPE) 2,380.00p 1.28% Pantheon International (PIN) 319.00p 1.27% SDCL Energy Efficiency Income Trust (SEIT) 57.00p 1.24%

FTSE 250 - Fallers

Close Brothers Group (CBG) 396.60p -6.77% Group (MONY) 245.60p -2.77% TBC Bank Group (TBCG) 2,820.00p -2.59% Babcock International Group (BAB) 458.00p -2.47% Allianz Technology Trust (ATT) 332.00p -2.35% Darktrace (DARK) 346.70p -2.34% Wetherspoon (J.D.) (JDW) 790.50p -2.23% Spirent Communications (SPT) 116.90p -2.18% Ashmore Group (ASHM) 217.40p -2.16% Games Workshop Group (GAW) 9,605.00p -2.14%

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