Economist Rupert Seggins has created some useful charts to explain today’s labour market report (which is released in 45 minutes):
In the City, shares in Dixons Carphone have jumped by 7.5% in early trading after it reported its best ever Black Friday trading.
That makes amends for a 60% tumble in pre-tax profits over the six months to 28 October, when Dixons Carphone suffered from a slowdown in mobile phone sales.
CEO Seb James tweets that earnings growth should pick up over the crucial Christmas period:
Mike van Dulken of Accendo Markets is hoping for a cheering unemployment report today:
UK Unemployment (9:30am) is expected to drop to a fresh 42-year low of 4.2%, while Average Earnings (incl. bonus) accelerate to a 2017 high of 2.5% (still shy of inflation, which hit a new multi-year high of 3.1% yesterday) and the ex-bonus print holds firm at 2.2%.
Here are the City consensus forecasts for today’s UK jobs report:
The agenda: UK unemployment report
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britain’s cost of living squeeze intensified yesterday, as inflation spiked unexpectedly to a six-year high of 3.1%.
Today, we discover if wages are catching up, with the publication of the latest UK labour market report. Economists suspect that higher bonuses may have pushed earnings growth up to 2.5% – slightly closing the gap with inflation.
Basic pay is probably still lagging behind, though, at just 2.2% per annum in the last three months. That would leave many workers struggling to keep pace with rising prices.
The City will also be looking to see whether Britain’s economy created more jobs in the July-October quarter. A month ago, we saw the first drop in employment since the Brexit vote, triggering fears that the labour market is losing momentum.
It’s also possible that the unemployment rate could hit a new four-decade low of just 4.2%.
Jasper Lawler of London Capital Group says traders will focus on the earnings figures.
The important element here will be hourly wages, which could give an indication as the extent to which UK household purses are being squeezed. Average hourly wages are expected to be 2.5% in the three months to October, which is a respectable 0.3% increase from the three months to September.
This would represent a rare closing in the gap since Brexit, between the cost of living and wage growth.
The report is also expected to show resilience in other areas of the labour market, as well such as a further decline in the rate of unemployment. Yet while the UK jobs market may put on another showing of strength, the pound could struggle to react positively for the same Brexit jitter reasons that weighed on the pound following yesterday’s inflation report.
In the City, technology retail group Dixons Carphone and holiday group TUI are reporting results.
After European traders have headed home, America’s Federal Reserve will (probably) raise US interest rates. It will also be Janet Yellen’s final press conference as Fed chair, following Donald Trump’s decision not to reappoint her.
Royal Bank of Canada expect little excitement though:
Yellen’s press conference should prove to be a non-event given her recent testimony in Congress and that she will soon be stepping down once Powell is confirmed. The bigger question therefore is whether the Fed will significantly alter its economic and rates projections.
Our US colleagues’ view is that they would prefer to wait until March to make significant upgrades when they are likely to be in a better position to model the impact of the looming tax plan.
- 9.30am GMT: UK unemployment statistics
- 10am GMT: Eurozone industrial production data for October
- 1.30pm GMT: US inflation data for November
- 7pm GMT: US Federal Reserve interest rate decision