The pound gained almost 1% against the single currency and the US dollar yesterday following strong UK employment data which indicated that the number of people working in the UK grew by 27,000 in the three months to November.
This was well above market forecasts of a 5% increase. Wages also grew faster than expected with average earning (including bonuses) coming in at 6.4%, higher than market expectations of 6.1%. Without bonuses, the rate of wage increases also came in at 6.4%.
This morning, UK markets heard the inflation rate eased to 10.5% in December from 10.7% one month prior. This marks the second consecutive month of slowing inflation, but the rate still remains close to a 40-year high.
Despite easing inflation, the cost-of-living crisis continues. Chancellor Jeremy Hunt said:, “High inflation is a nightmare for family budgets, destroys business investment and leads to strike action, so however tough, we need to stick to our plan to bring it down.”
Continuing the nationwide conversation on pay disputes and strikes, train workers represented by Aslef and RMT will take part in fresh strikes on 1 and 3 February following a pay deal rejection. It’s expected that these strikes will affect services across 14 operating companies.
The Communications Workers Union (CMU) which represents a large number of Royal Mail workers warned of more strikes yesterday following a rejection of Royal Mail’s “best and final” offer of a ‘up to 9% pay rise over 18 months.
Across the globe, China reported its economy grew 3% in 2022, below government targets of 5.5% under strict restrictions surrounding Covid-19 which were abruptly lifted in late December 2022.
The UK unemployment rate for the three months up to November remained unchanged at 3.7%. This was in line with market forecasts and the same as the previous period.
Later today, markets await an interest rate decision from the Bank of Japan which is expected to remain unchanged at -0.1%
In the UK, it’s a busy day for data with retail price index, key PPI data and labour productivity after inflation this morning.
US economists await similar data on key PPI, retail sales, MBA 30-year mortgage rates and several speeches from the Federal Reserve.
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