Suggesting a relative softening in the UK labour market over the recent period, both wage growth and vacancies were reported to have fallen in the latter part of 2023. Excluding bonuses, wage growth fell from 7.3% to 6.6% in the three months to November, while the number of vacancies dropped for the 18th consecutive time (falling by 49,000 to 934,000). Job openings still remain above pre-pandemic levels overall, and wage growth is still outrunning price rises. However, the latest figures may provide some relief for the Bank of England as both are signs that a wage growth spiral is unlikely. The Office for National Statistics also published data on Tuesday showing that the UK’s unemployment rate remained unchanged in the three months ending November at 4.2%, illustrating that there is still stability in the labour market.
On Wednesday, inflation data was also released for the UK, with the figure for December slightly up ticking to 4% from 3.9% in November and coming in higher than expectations of 3.8%. The annual figure was in part due to the tax placed upon tobacco duty following Chancellor Jeremy Hunt’s Autumn Statement, in addition to rising alcohol prices, although both were countered somewhat by lower growth in food prices. Core inflation, excluding volatile elements such as energy and food remained the same at 5.1%. As higher interest rates take time to filter through into the wider economy, however, this slight uptick hasn’t undermined hopes for interest rate cuts in 2024.
China’s GDP figure for Q4 was also confirmed today at 5.2% – slightly below expectations following a difficult period of post-Covid recovery where the region struggled to maintain consistent growth momentum. The data was also coupled with retail sales figures that served to further underwhelm investors. While markets were indeed off while they digested the latest reports, the news however no doubt represents a key buying opportunity over the long term as it places further pressure on policymakers to take more tools out of their stimulus box to boost the economy. Conversely, industrial production grew 6.8% year-on-year in December, trumping market expectations of 6.6% and illustrating a steady pick up in China’s industrial business activity.
Over in Ireland, CPI inflation rose to 4.6% in December 2023, as expected. Reports confirmed that the EU-standard Harmonised Index of consumer prices also climbed by 3.2% year-on-year from a 2.5% increase in November. Large increases could be seen in restaurants and hotels (at 6.6%) and recreation and culture (10.3%).
Still to come this week we have US retail sales and industrial production, UK retail sales and Japanese CPI.
Nicola Tune, Portfolio Specialist
