Proactive Investors - The FTSE 100 hit a two-month high and bond yields dropped as figures showed wage growth easing in November.
Average weekly earnings excluding bonuses rose by 7.3% in the three months through October, compared to the expectation of 7.4% and last month’s 7.7% growth, numbers from the Office for National Statistics (ONS) showed.
Including bonuses, weekly earnings rose by 7.2%, well below the 7.7% estimate.
The ONS also said the unemployment rate was unchanged at 4.2% although job vacancies in the three months to November fell for the 17th consecutive period.
The figures were seen to support the growing narrative that the Bank of England will cut interest rates sooner rather than later next year.
Government borrowing costs slumped after the data, with the yield on the 10-year UK gilt dropping 12 basis points, back below 4%, while the two-year gilt yield fell nine basis points to 4.49%. .
UK economist Ashley Webb of Capital Economics said the sharp fall in wage growth “will reinforce the growing belief in markets that interest rate cuts will start sooner rather than later.”
However, Michael Hewson, chief market analyst at CMC Markets UK said anyone who thinks the latest jobs numbers “is likely to prompt an earlier pivot from the Bank of England when it comes to rate policy is kidding themselves”.
The Bank of England is widely expected to leave interest rates unchanged when policymakers next meet on Thursday.
Money markets have priced in a first cut in interest rates by June at the latest with three cuts being predicted in 2024 as a whole.