A boost to living standards after wage growth accelerated to 5.6% has been offset by signs of a cooling labour market.
Adjusted for inflation, the real-terms growth in earnings was the highest since summer 2021.
Meanwhile, the shares of Premier Foods performed well after it reported a 20% surge in Mr Kipling mince pie sales over Christmas.
FTSE 100 Live Tuesday
- Wage growth accelerates, jobless rate up
- Premier Foods reports strong sales
- Defence engineer set for AIM listing
Market update: Lloyds leads FTSE 100, Premier Foods up 3%
10:23 , Graeme EvansA surprise twist in the UK’s car finance mis-selling case today helped the shares of Lloyds Banking Group and Close Brothers to bounce 5% and 20% respectively.
According to the FT, chancellor Rachel Reeves has sought to intervene in the Supreme Court case as she fears that multi-billion pound payouts could damage Britain’s reputation as a place to do business.
Lloyds Banking Group, which is the UK’s largest UK motor finance lender with a 15% market share, rallied 2.5p to its highest level since October at 61.1p. Former FTSE 250 stock Close Brothers jumped 49.4p to 294.2p.
AJ Bell investment director Russ Mould said: “The Treasury appears eager to ensure that lenders (and the UK economy) aren’t derailed by the issue and any redress is simply proportionate to the loss suffered, rather than significantly greater sums inflated by large compensation payments.”
Lloyds was the clear frontrunner in the FTSE 100 index, which rose 10.59 points to 8531.29 amid signs that Wall Street markets will open higher following Donald Trump’s inauguration.
The dollar also rallied in today’s session, leaving the pound back at $1.224 after yesterday’s strongest performance in over a year.
Traders continue to expect that the Bank of England will cut interest rates next month, despite new figures today showing an acceleration in annual wage growth to 5.6% for the three months to November.
The boost to living standards through the highest real-terms growth in earnings since summer 2021 was offset by a rise in the jobless rate to 4.4%.
Alongside Lloyds on the risers board, Barclays added 3.65p to 295.5p and Marks & Spencer improved 4p to 342.2p. The potential boost for the car retail industry meant Auto Trader shares lifted by 9.2p to 793.6p.
On the fallers board, Sainsbury’s dipped 3.6p to 261.2p and Rightmove lost 8.6p to 655.8p.
Mid-cap updates were well received by investors as wealth management platform Abrdn rose by 4% or 6.3p to 148p, corporate merchandise firm 4imprint added 305p to 5280p and Kier Group put on 7p to 145.4p.
Premier Foods advanced 3% or 5.8p to 184.8p after it reported a strong festive season, with quarterly sales growth of 3.1% pushing profit expectations towards the upper end of City hopes.
Trading highlights included by Mr Kipling, which sold 20% more mince pies to deliver its biggest ever quarter.
FTSE 100 banks in demand, BT and Diageo lower
08:35 , Graeme EvansLloyds Banking Group is the clear frontrunner in the FTSE 100 index as the lender’s strong start to 2025 continued today with a rise of 2.8p to 61.5p.\
The advance followed a report by the FT that the Treasury is seeking permission to intervene in the multi-billion pound motor finance mis-selling case currently before the Supreme Court.
The shares of former FTSE 250 stock Close Brothers jumped by 21% or 51.4p to 296.2p.
Elsewhere in the sector, Barclays added 4.25p to 296.1p and NatWest improved by 3.5p to 418.3p to help the FTSE 100 lift 14.05 points to 8534.59.
On the fallers board, BT Group shares dropped by 2.25p to 139.9p and Primark owner Associated British Foods weakened 29.5p to 1972.5p. Diageo fell 31.5p to 2406.5p.
Among FTSE 250 companies reporting today, the shares of wealth management platform Abrdn rose by 7% or 11p to 152.6p and corporate merchandise firm 4imprint rallied by 275p to 5250p.
Others doing well after updates included Alpha Group International, which lifted 120p to 2370p, and Kier Group after a gain of 7.2p to 145.6p.
Mr Kipling drives Premier Foods performance
08:15 , Graeme EvansPremier Foods, whose brands include Ambrosia and Batchelors, today bolstered profit guidance after reporting sales growth of 3.1% in the third quarter to 28 December.
Chief executive Alex Whitehouse said Mr Kipling sold 20% more mince pies this year, delivering its biggest ever quarter.
He added: “Earlier this year, we said that consumers are starting to trade up and treat themselves more.
“This has continued over Christmas with our premium ranges such as Ambrosia Deluxe desserts, Bisto Best gravy and Mr Kipling Signature Brownie Bites performing strongly.”
The FTSE 250-listed shares rose 5% or 9.2p to 188.2p after Premier said annual trading profits will be at upper end of City forecasts between £180.1 million-£186.4 million.
Ex-RAF engineers reveal plan for AIM listing
07:57 , Graeme EvansA defence industry consultancy set up five years ago by two ex-RAF engineers is to list on the AIM market of the London Stock Exchange.
RC Fornax hopes to raise £5 million as it looks to accelerate its growth objectives, including the development of an advanced AI tool.
The consultancy, which specialises in supporting critical military platforms, was founded by Paul Reeves and Daniel Clark after they spotted deficiencies in the existing outsourced contract defence market.
It has since achieved a compound annual growth rate of 100%, having generated £6.5 million in 2024 for underlying earnings of £900,000.
Reeves said: “When I co-founded this business in 2020 with Daniel, our vision was to enhance the defence consulting industry and create a company that would stand at the forefront of innovation and excellence in supporting the national security of the UK.
“By floating on AIM we will be able to gain the platform, resources, and visibility needed to strengthen our role in supporting the UK's defence and high-tech industries."
Inflation-adjusted earnings growth highest since 2021
07:36The 5.6% wage growth in today’s jobs market report results in a real term rise of 2.5% when inflation is taken into account, the highest since the summer of 2021.
November’s earnings figure was driven by a rise in private sector wage growth from 5.4% to 5.8%.
Capital Economics said: “While the further rise in regular private sector pay growth in November will cause the Bank of England some unease, it will take comfort from the continued loosening in labour market activity.
“We still think the Bank of England will cut interest rates at the next meeting in February, from 4.75% to 4.5%, and continue to cut rates gradually thereafter.”
Jobless rate at 4.4%, earnings growth at six month high
07:13 , Graeme EvansThe UK’s unemployment rate rose to 4.4% in the three months to November, up from 4.3% previously and the highest level since May.
Average earnings including bonuses increased 5.6% on an annual basis in the quarter to November, up from 5.2% but broadly in line with City forecasts.
The pay excluding bonuses figure also came in at 5.6%, slightly above market expectations and the highest figure in six months.
Index seen lower, Bitcoin and pound fall back
07:01 , Graeme EvansAsia markets have seen robust trading while the dollar has recovered some of the ground lost on the day of Donald Trump’s inauguration.
The pound, which yesterday had its best session in a year, weakened in early dealings to stand at $1.2262.
The Hang Seng index rose 0.8% while the Shanghai Composite stayed close to its opening mark.
The FTSE 100 is seen falling slightly after setting a second successive record close at 8520 in yesterday’s session.
Bitcoin is at $101,773 after touching $109,000 on Monday.