Proactive Investors -
- FTSE 100 drops 1 point to 8432
- Diploma (LON:DPLM) tops leaderboard after results
- Shein IPO in London reported to be close
FTSE in the red, Europe too
London's blue-chip index is joining most of its European counterparts in the red, having dropped just a point or two at a few moments in the past hour or so.
While the FTSE is searching for direction, generally fairly flat, Germany's DAX is down 0.2% and France's CAC-40 is 0.1% lower.
Notable continental fallers include ASML (AS:ASML) down 0.9%, Orsted down 4.6%, Siemens down 4% and Leonardo down 3.8%.
UK wages rising faster than productivity
UK wages over the past year have grown at the fastest rate in 16 years despite any improvement in productivity, according to new research from the Resolution Foundation.
Real wages have risen "without putting further pressure on inflation", the research found, as falling pension costs and import prices have "temporarily severed the link between productivity and wage growth" in Britain.
However, it is a trend that is not set to last, the think tank reckons.
Real average weekly regular earnings have grown by 2.1% in the 12 months to February 2024, helping recover some of the lost ground from pay rises being well below inflation for several years.
Productivity, as measured by output per worker, fell by 0.6% in the 2023.
The report said there are two key reasons why this unproductive wage growth is affordable for firms and is not fuelling inflation: employer social contributions such as payroll taxes and pension contributions that normally add to a firm’s wage bill actually fell during the period (due to rising interest rates helping reduce pension deficits and allow firms to redirect those contributions back into wage packets) and some rewinding of the rise in import prices during the cost of living crisis.
"After 16 years of wage stagnation, real pay packets in Britain are growing again at a healthy two per cent," said Greg Thwaites, research director at the Resolution Foundation.
He added: "But while this welcome real wage recovery has been affordable so far, it won’t be in the future. Unless productivity picks up, wage growth will peter out, or pay rises will simply be passed on through higher prices and prolong our inflation problems."
FTSE 100 back in the red, led by Phoenix Group
The FTSE has slid back into the red, down four points, with BAE Systems (LON:BAES) still the biggest faller, down almost 3% with no obvious reason why apart from profit taking as it hit all-time highs last week.
Phoenix Group Holdings PLC (LON:PHNX) has joined the fallers after announcing that its finance chief is stepping down after 23 years at the company.
The long-term savings and retirement group called Rakesh Thakrar, who joined when it was a much smaller business in 2021, "central" to its acquisition strategy.
Phoenix will begin a formal process to find his successor but in the meantime said it has hired former Abrdn CFO Stephanie Bruce in an interim role.
Shares in the company were down 2.4%.
Ocado (LON:OCDO), a perennial market mover, is also among those blue chips down more than 1%, joined by housebuilder Persimmon (LON:PSN).