Britain's FTSE 100 index experienced a decline of 0.52% at the close of trading on Tuesday, influenced by a disappointing jobs report that reveals a trend of slowing wage growth within the country. Recent data from the Office for National Statistics indicates that for the three months ending in August, wages in the UK, including bonuses, only increased by 3.8% year over year.
This marks a decrease from the previously revised growth of 4.1% in the prior quarter. Despite the downturn in wage growth, the unemployment rate has seen a slight reduction, dropping from 4.1% to 4%. Additionally, employment levels have risen from 74.8% to 75% during the same timeframe. Analysts from ING anticipate that these latest employment figures will lead the Bank of England to consider quicker rate cuts, with predictions suggesting that rates could be reduced in both November and December.
Such cuts may lower the bank rate to 3.25% by the summer of 2025. In their assessment, ING noted that while unemployment rates may be declining, the number of job vacancies is also on the decline. The more immediate and reliable payroll data suggests that the job market currently resembles the conditions seen in 2019, a period that recorded a wage growth of only 3.5%, in stark contrast to the 5% observed today.
ING emphasized that while this adjustment in the wage trajectory may take time, it indicates that the trend is towards further reductions in wage growth in the coming months. If their predictions hold true, this will likely result in hastened rate cuts by the Bank of England. On a different note, the UK government is preparing to implement reforms within the financial framework of the British Business Bank.
These reforms aim to secure additional investments and enhance the bank's flexibility to respond to the current market dynamics. The proposed measures also intend to make the bank's 7.9 billion-pound-sterling commercial programs a permanent fixture. In the realm of corporate news, shares of Wise ($WISE) have surged by 2.14% following the company's announcement of its goal to achieve underlying income growth between 15% and 20% for the fiscal year 2025.
The financial technology entity reported an improvement in underlying income during the fiscal second quarter, demonstrating robust performance amid the prevailing economic uncertainties..