Must read: defence stocks weigh, FTSE 100, UK unemployment
ii’s head of investment rounds up the morning’s big news.
16th December 2025 08:51
by Victoria Scholar from interactive investor
GLOBAL MARKETS
The FTSE 100 has opened slightly lower, dragged down by defence stocks like BAE Systems (LSE:BA.) and Babcock International Group (LSE:BAB) as Ukraine talks make some progress. France’s services flash PMI for December fell to 50.2 versus 51.4 in November, yet remained above the 50 boom-bust divide. Its manufacturing PMI however improved to 50.6 versus 47.8 in November.
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US futures are pointing lower after a softer session on Monday when the Nasdaq closed down almost 0.6%, led lower by AI companies like Oracle Corp (NYSE:ORCL) and Broadcom Inc (NASDAQ:AVGO). The US dollar is trading around two-month lows ahead of the latest delayed US non-farm payrolls report as well as retail sales for October. The unemployment rate is expected to hit 4.4% in November while payrolls are seeing rising by 50,000 in November.
UK UNEMPLOYMENT
The UK unemployment rate hit 5.1% between August and October, rising from 5% last month to the highest since January 2021. Average earnings growth (ex bonuses) slowed to 4.6% versus 4.7% month-on-month while total pay growth slowed by 0.2 percentage points to 4.7%.
Today’s jobs market report paints a gloomy picture of the state of the UK labour market, with rising unemployment and cooling wage growth. Employers have clearly been reluctant to burden themselves, with the long-term fixed costs of additional staff hires amid the UK’s uncertain economic backdrop especially in the build up to the Autumn Budget.
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Younger people in particular have been affected by the unfavourable hiring climate with stagnant vacancies and greater layoffs. And there are longer term worries about how AI could cannibalise job opportunities as companies look to automate tasks and reduce labour costs.
For the Bank of England, today’s report strengthens the case for a 25 basis-point rate cut on Thursday which looks extremely likely at this point. Slower wage growth points to less inflationary pressure stemming from the jobs market, better positioning the central bank to loosen monetary policy without having to worry as much about the risk of a wage-price spiral.
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