The latest data on the labour market was released this morning with the number of people in employment falling for the first time in more than a year, but there were some positives. Average earnings rose and the claimant count also fell more than expected in positive signs that will likely dampen some of the negativity around the headline release. Both the FTSE 100 and pound are slightly softer in early trade with both markets paring recent gains as we look ahead to two major events later on today.
UK employment declines but no need to panic yet
The three months through October saw UK employment fall for the first time in more than a year, and whilst this is clearly not a positive development it isn’t necessarily a major warning sign on its own. A fall in the number of people in work of 6,000 to 31.76 million has attracted some headlines but several other employment metrics remain strong. The number of people claiming unemployment related benefits during the month of November increased by 2,400 - substantially below the increase of 13,300 seen in October, and also below the consensus forecast for a 6,200 rise. Furthermore workers will be pleased to see that average earnings rose by the most in a year, which will go some way to softening the blow of a rising inflationary environment.
Dixons Carphone (LON:DC) weighs on UK stock benchmarks
The worst performing stock on the FTSE 100 this morning is Dixons Carphone, with the retailer seeing its stock slump by almost 5% despite posting a respectable set of results. The latest earnings show a 19% rise in headline profit before tax as well as market share increasing across all markets in the 26 weeks ended October 29th.
Having said that, the shock from the Brexit vote is still evident in the firm’s share price, and whilst it has recovered somewhat from the low seen in the weeks that followed the event, it will likely remain a headwind going forward. it's been a challenging year for shareholders in the retailer and despite some improvement in recent months the market cap still remains around a fifth lower than it did at the start of 2016.
Whilst retail sales figures have been robust since the referendum, this positive is more than outweighed by several adverse effects that have occurred due to the Brexit vote. Big-ticket electrical purchases from non-UK producers are expected to see margins squeezed - largely due to a fall in the pound - whilst higher inflation may also lead to rising wages. Overall this report contains several positives but shareholders should be under no illusions that it signals a drastic turnaround in their fortunes, with several headwinds set to persist in the foreseeable future.