FirstFT: Wage growth slows in UK, US and eurozone

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Wage growth has slowed across major economies over the past six months, in a further sign that central banks are under increased pressure to begin cutting interest rates in the first half of the year.

Year-on-year growth in advertised wages and salaries stood at 3.8 per cent in the US in December following a steady two-year decline from a peak of 9.5 per cent in late 2021, according to a cross-country wage tracker published by the job search website Indeed.

Annual wage growth also stood at 3.8 per cent in the eurozone, down from a 2022 peak of 5.2 per cent, according to Indeed. Even in the UK — where wage growth has been stronger and more persistent — the median rate of pay cited in job ads was 6.6 per cent higher than a year earlier, down from a peak of 7.4 per cent in June.

The figures will reassure monetary policymakers who worry that it will be harder to bring down inflation sustainably to target if wages continue rising rapidly and companies pass on the costs to consumers. Here are more details on the data.

And here’s what else I’m keeping tabs on today:

• Davos day three: Geopolitical risks are overshadowing economic optimism at the World Economic Forum’s annual meeting in Switzerland, where UK shadow chancellor Rachel Reeves plans to pitch Britain as an investment destination to business leaders. Join us for on-the-ground analysis and insightful events as the week unfolds.

• Economic data: The EU and UK have December inflation figures, while the US has retail sales data and the Federal Reserve publishes its Beige Book on economic conditions. Opec publishes its monthly oil market report.

• Nato: Military chiefs meet for two days at the alliance’s headquarters in Brussels following its pledge last week to continue providing aid to Ukraine.

• Sierra Leone: Former president Ernest Bai Koroma is due to appear in court, charged with four offences including treason over a foiled coup in November.

What are your bonus expectations? Do you intend to invest, save or spend the cash? Let us know in our quick, anonymous survey here.

Five more top stories

1. China’s population decline accelerated last year as its economy grew at one of the lowest rates in decades, pointing to persistent challenges for the world’s second-largest economy from a property slowdown, deflation and demographic pressures. Gross domestic product expanded 5.2 per cent, exceeding one of the government’s lowest official targets in decades at 5 per cent. Here’s what experts think the new data means for Beijing’s policymakers.

2. Exclusive: PwC has dropped some of its diversity targets in the US and opened up previously off-limits scholarships to white students after pressure from rightwing activists and a Supreme Court ruling against affirmative action. The Big Four accounting firm said it was applying “rigour” to its diversity, equity and inclusion efforts. Stephen Foley has the full story from New York.

3. The US is preparing to name the Houthis as a specially designated global terrorist group, according to people familiar with the matter. The decision, to be announced in the coming days, comes as the Iran-backed militants continue to attack commercial vessels in the Red Sea despite a US-led military response. Here’s what the new label entails.

• US strikes: American forces carried out their third strike on the Yemen-based rebels in less than a week, destroying four anti-ship ballistic missiles, according to the US military.

• Israel-Hamas war: Qatar has mediated an agreement between the two sides to send humanitarian aid into Gaza as part of a deal to provide medicine to Israeli hostages.

4. Investment firms are raising billions of dollars to buy stakes in venture capital-backed technology start-ups, as a long drought in acquisitions and listings forces early investors to offload their stock at discounts. The start-up secondary market is becoming an increasingly important trading venue in the absence of traditional ways of cashing out. Here’s how much different firms are raising.

5. Two deputy Conservative party chairs have quit after Rishi Sunak suffered the biggest revolt of his premiership yesterday, with 60 Tory MPs attempting to force him to toughen up his Rwanda asylum legislation. The UK prime minister defeated the rightwing rebels in the House of Commons thanks to the backing of opposition parties, but the move has come at a high political price.

Letter from the editor

How will democracy fare in 2024? As the world heads to the polls in what is set to be a historic election year, the Financial Times has launched a series of articles and films on the political challenges and promises ahead. FT editor Roula Khalaf introduces Democracy 2024 in her letter to readers today, kicking off our year-long series with films featuring authors Margaret Atwood and Elif Shafak. Don’t miss the rest of our coverage at ft.com/democracy2024.

We’re also reading . . . 

Chart of the day

What is going to happen to the world economy? We will never know the answer to this question, writes Martin Wolf, but there are some big features that are not really uncertain, including growth, an inherent feature of the global economy.

Take a break from the news

A new Four Seasons “floating resort” in Palau offers some of the world’s best scuba diving. The three-deck catamaran offers levels of comfort unheard of in most dive boats and allows guests to sail away on a whim to the next bay or the next of the Pacific nation’s many islands.

Additional contributions from Benjamin Wilhelm and Gordon Smith