The pace of UK wage growth soared in December as the unemployment rate rose following a sharp drop in the number of payrolled employees, according to the latest official figures by the Office for National Statistics. The unemployment rate rose to 4.4 per cent in the three months leading up to November, up from 4.3 per cent in the previous three months.

The number of payrolled employees was estimated to have plummeted by 47,000 during December compared to November, bringing the total to 30.3 million. This marks the biggest drop in payrolled employees since November 2020. It follows a revised 32,000 fall in the previous month.

“There is nothing in this data that will derail a February cut from the Bank of England,” Luke Bartholomew, an economist at asset management firm Abrdn, said in a note to investors.

Meanwhile in the US, mortgage rates have increased in recent months, despite the Federal Reserve cutting interest rates.

According to a survey of lenders by mortgage-finance provider Freddie Mac, the average rate on the standard 30-year fixed mortgage rose to 7.04 per cent last week. This is the first time since May that the 30-year mortgage rate exceeded seven per cent, a significant psychological level for buyers and sellers. High mortgage costs are reducing existing home sales, which are expected to decline to 4.013 million in the first quarter of this year. House price growth is projected to slow to 3.5 per cent this year, with income growth potentially improving affordability.

Finally, German producer prices, a measure of the change in selling prices that domestic producers pay for their goods and services, rose at a faster rate in December largely due to higher capital goods prices, official data showed on Monday.

Producer prices grew by 0.8 per cent in December compared to the same month the prior year, marking the second consecutive month of annual growth. The index inched down by 0.1 per cent month-over-month. The December increase in producer prices was mainly driven by a 1.8 per cent rise in the costs of investment goods.

Significant increases were noted in the cost of machinery, which rose by two per cent, and in the cost of vehicles, which saw a 1.4 per cent uptick.

This article does not constitute legal and/or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap. 370 of the Laws of Malta).