The FTSE 100 is poised for a subdued open on Tuesday, June 10, as investors digest the latest UK labor market data showing a rise in the unemployment rate and moderating wage growth. Futures markets predicted a marginally higher open, with a gain of around 16 points anticipated, following a slight dip in the index at the start of the week.
The latest figures from the Office for National Statistics reveal that the UK’s ILO unemployment rate increased to 4.6% in the three months to April, up from 4.5% previously. This marks the highest level since mid-2021 and aligns with market expectations. The uptick in unemployment comes as some firms hold back on hiring or replacing staff, reflecting a weakening in the labor market. Employment, however, did rise by 89,000, outpacing forecasts and indicating some resilience despite broader caution among employers.
Wage growth, a key metric for both households and policymakers, also showed signs of cooling. Regular pay (excluding bonuses) rose by 5.2% year-on-year, down from 5.6% in the previous period and slightly below consensus estimates. Total earnings growth, including bonuses, eased to 5.3%. These figures suggest that while pay growth remains historically strong, momentum is slowing as businesses respond to higher costs and economic uncertainty.
The pound edged lower, dropping 0.2% to $1.3526, as markets interpreted the data as supportive of further Bank of England rate cuts later this year. Analysts note that higher national insurance contributions and an increase in the national living wage have contributed to the shifting employment landscape, with some sectors—such as construction—already reducing staff at the fastest pace in nearly five years.
Global market sentiment remains mixed, with Wall Street closing little changed overnight and Asian markets showing no clear direction. Against this backdrop, the FTSE 100 is expected to trade near the flatline, as investors weigh domestic labor market challenges against broader international trends.
The focus now turns to the Bank of England’s next move, as policymakers balance the need to support growth with ongoing inflation concerns. For UK equities, labor market softness and moderating wage pressures could shape market expectations in the weeks ahead.
