German Wholesale Prices Decline, UK Wage Growth Slows

Bridgette Randall
12 Dec, 2023
Frankfurt

The European markets traded higher, and investors awaited rate decisions from the European Central Bank and other central banks this week.

Benchmark indexes in Germany and France advanced and traded near recent highs, but the market indexes in London edged lower on the persistent weakness in commodity prices.

Economic news dominated market sentiment, and investors reviewed the latest decline in the German wholesale price index and the slower wage growth in the UK.

 

German Wholesale Prices Decline Extended to 8th Month

Germany's wholesale prices declined 3.6% in November following the falls of 4.2% in October and 4.1% in September, the Federal Statistics Office, or Desatis, reported Tuesday.

Wholesale inflation declined for the eighth month in a row, reflecting higher prices in the previous year because of the war in Ukraine.

Wholesale prices fell 0.2% from the previous month, but at a slower pace than the 0.7% decline in October.

Petroleum product prices decreased by 13.9%; grain, seed, and tobacco prices by 24.3%; chemical products by 20.9%; and metals and semi-finished metal products by 12.8%.

On the other hand, wholesale prices for fruits and vegetables jumped 14.8%, sugar, confectionary, and bakery products increased 10.1%, and beverage prices increased 7.4%.

 

UK Wage Growth Slowed, Jobless Rate Held Steady at 4.2%

Weekly regular wages in the UK increased less than expected in the three months to October, the Office for National Statistics reported Tuesday.

Regular weekly wages, excluding bonuses, increased 7.3% to £620 in the period, slower than the upwardly revised 7.8% in the previous period ending in September.

The average wage, including bonuses, increased 7.2% from a year ago, slower than the revised 8.0% increase in the previous period.

The regular wage rose at a slower pace for the second time in a row and advanced at the slowest pace in six months.

Wage growth in the private sector slowed to 7.3% from 7.9%, and wages in the public sector rose 6.9% compared to 7.4% in the previous period.

Real wages, after adjusting for inflation, rose 1.4%.

The unemployment rate held steady from the previous period at 4.2% in the three months to October.

Job vacancies declined for the 17th period in a row, and vacancies fell for the longest period on record but were still higher than pre-pandemic levels, the ONS said in the report.

Job vacancies decreased by 45,000 to 949,000 in the quarter ending in November from the previous quarter ending in August.

The estimated number of jobs in the workforce expanded to a record 36.8 million in September, an increase of 210,000 from June.

 

Europe Indexes and Yield

The DAX index increased 0.2% to 16,830.29, the CAC-40 index rose 0.4% to 7,576.04, and the FTSE 100 index fell 0.6% to 7,578.66.

The yield on 10-year German bonds increased to 2.29%; French bonds traded higher to 2.78%; the UK gilts rose to 3.98%; and Italian bonds inched higher to 4.01%.

The euro traded lower to $1.079, the British pound inched lower to $1.256, and the U.S. dollar eased to 87.66 Swiss cents.

Brent crude increased $0.13 to $76.16 a barrel, and the Dutch TTF natural gas increased by €0.58 to €35.54 per MWh.

 

Europe Stock Movers

Rate-sensitive stocks were in focus ahead of the interest rate decision and policy announcement from the European Central Bank on Thursday.

BNP Paribas, Societe Generale, Deutsche Bank, Commerzbank, and UniCredit declined between 0.1% and 1.5%.

Allianz, Swiss Re, Generali, Aegon, and Mapfre declined between 0.2% and 1.5%.

Nokia Oyj rose 1.3% to €2.98 after the telecom equipment maker lowered its profitability goal after the company lost a multi-year contract with the U.S.-based AT&T.