Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FTSE 100 slightly higher, unemployment falls, average pay accelerates

Published 13/09/2022, 09:50
Updated 13/09/2022, 10:11
© Reuters FTSE 100 slightly higher, unemployment falls, average pay accelerates

© Reuters FTSE 100 slightly higher, unemployment falls, average pay accelerates

  • FTSE 100 slightly higher, up 9 points
  • UK unemployment rate falls to lowest level since 1974
  • Ocado warns of lower sales and profits at Ocado Retail

A fall in UK unemployment over the summer offered some solace in the face of the headwinds facing the economy, according to the EY ITEM Club although it noted the decline was driven mainly by a rise in inactivity, with the number in work increasing only modestly.

Martin Beck, chief economic advisor to the EY ITEM Club, said: “Against a backdrop of GDP seeing next to no growth over the late spring and summer, a fall in unemployment delivered some positive news.”

“However, the decline in joblessness disguised what was only a modest 40,000 rise in employment, the smallest since January to March.”

Total pay growth accelerated to 5.5% year-on-year in the three months to July from 5.2% in June and Beck said this “significantly faster growth in pay” will probably carry more weight in the MPC's thinking in advance of next week's monetary policy decision than the weakness of employment growth or the fall in vacancies.

Beck said he expects unemployment to rise, but anticipates a softer landing compared to past economic downturns.

9.25am: Deutshce upgrades BT

Deutsche Bank (ETR:DBKGn) has taken BT Group PLC LON:BT of its sell list upgrading the company to hold.

Although the broker viewed the shares as more expensive than telco peers (especially relative to risk) it said it feels there is now a less skewed balance of potential newsflow.

Deutsche said BT could benefit from a stay on planned tax rises, ongoing inflation feeding through automatically to prices and perhaps a stronger pound which would benefit 'domestic' stocks within the FTSE.

Against this is consumer and B2B weakness and the risk of higher churn in the face of higher prices and a recession, Deutsche cautioned while ultimately alt-net proliferation will increase both business to commerce and business to business competition.

Deutsche has an unchanged price target of 140p.

9.00am: Ocado a case of "jam tomorrow."

Richard Hunter, head of markets at interactive investor said today’s warning from Ocado Group PLC (LSE:OCDO) of lower sales and profits at Ocado Retail has the impact of confining Ocado to becoming a perennial “jam tomorrow” stock.

Hunter said Ocado Retail, the joint venture with Marks and Spencer (LON:MKS) PLC, remains the major driver of group revenues, but lighter baskets and heavier costs are weighing on progress.

“Even though it accounts for around 90% of total group revenues, today’s statement relates solely to the joint venture with Marks & Spencer and does not therefore provide an update on the Solutions business” Hunter noted, adding “The high-tech and unique offering driven by robotics and seamless delivery is one where strong growth has been long-anticipated but has yet to materialise meaningfully.”

Hunter concluded “The jury remains out on prospects for the time being with the market consensus still stuck at a hold, albeit a strong one.”

8.35am: Aldi breaks into the Top 4

German-owned discounter Aldi has overtaken Morrisons to become Britain's fourth-biggest supermarket group, according to industry data published on Tuesday.

Market researcher Kantar said Aldi's sales rose 18.7% in the 12 weeks to September 4th, taking its UK grocery market share to 9.3% from 8.1% a year ago as consumers look for value during the cost of living crisis.

Aldi trails market leader Tesco (LON:TSCO), Sainsbury's and Asda but Aldi and fellow discounter Lidl now account for 16.4% of the market.

“Back at the start of the 2010s, Tesco, Sainsbury’s, Asda and Morrisons together accounted for over three quarters of the sector but that traditional big four is no more," said Fraser McKevitt, Kantar's head of retail and consumer insight.

The researcher said grocery inflation hit 12.4% in the four weeks to September 4th, another record, adding £571 to the average annual grocery bill, with products like milk, butter and dog food jumping up especially quickly at 31%, 25% and 29% respectively.

8.15am: FTSE 100 opens slightly higher

FTSE 100 made a subdued start to trading following strong gains yesterday with investors eyeing the US CPI figures due out later today for hopes that inflationary pressures have peaked.

At 8.10am the FTSE 100 was up 5 points at 7,478, while the broader FTSE 250 was up 14 points at 19,528.

In the UK, the latest jobs figures showed the unemployment rate had fallen to its lowest level, 3.6%, since1974, but analysts said the tight labour market could continue to push up wage growth.

ING Economics said: “The number of workers classified as long-term sick has jumped dramatically in the past couple of months, and that's one reason why firms are still struggling to source the staff they need.”

“While worker demand has cooled, Bank of England hawks will be worried that these shortages will continue to push up wage growth.”

Shares in Ocado Group PLC (LSE:OCDO) dipped 9% and Marks and Spencer Group PLC (LSE:MKS) by 3.2% after they said full year sales at their joint venture Ocado Retail would fall as consumers cut back on their weekly spend.

7:45am: Sales and profits to fall at Ocado Retail

Ocado Group PLC (LON:OCDO) has warned it expects a small fall in sales in full year 2022 at Ocado Retail, the joint venture between Ocado Group and Marks and Spencer Group PLC (LSE:MKS),, following a decline in trading in recent weeks as customers trade down and shop smaller baskets.

The online food retailer warned full year sales would fall in full year 2022 with EBITDA close to break-even adding cost headwinds (predominantly energy and dry ice) are likely to weigh on profitability in quarter four.

Quarter three sales were £532mln, up 2.7% compared to quarter three 2021, with even stronger growth expected in quarter four.

Active customer numbers grew 23% year-on-year to 946,000, driving an increase in average orders per week of 10.7%.

But while customers and orders have grown, consumers are shopping smaller baskets and seeking value-for-money items as they respond to inflationary pressures the company said.

As a result, the value of the average basket was down by 6% in the period, to £116, with a greater decline experienced later in the quarter during the peak summer holiday season.

7.25am: UK unemployment rate hits lowest level since 1974

The UK unemployment rate fell 0.2% to 3.6% in the three months to July hitting its lowest level since1974 and a decrease in the employment rate, while the economic inactivity rate increased.

The UK employment rate was estimated at 75.4%, down 0.2% on the previous three month period, and 1.1% lower than before the pandemic while the economic inactivity rate was estimated at 21.7%, up 0.4% on the previous period.

Growth in average total pay (including bonuses) was 5.5% and growth in regular pay (excluding bonuses) was 5.2% among employees in May to July 2022.

In real terms growth in total and regular pay fell in real terms (adjusted for inflation) on the year in May to July 2022, at 2.6% for total pay and 2.8% for regular pay.

6.55am: FTSE 100 seen slightly higher ahead of UK jobs and US CPI figures

The FTSE 100 is expected to open slightly higher following gains in the US overnight with UK jobs figures and US CPI numbers in focus.

Spread betting companies are calling the FTSE 100 up by around 10 points.

In the US, the Dow finished Monday up 321 points, 0.7%, at 32,383, the Nasdaq Composite added 154 points, 1.3%, to 12,266 and the S&P 500 improved 43 points, 1.1%, to 4,111.

The closing bell marked the fourth consecutive winning day for the major indices.

Michael Hewson chief market analyst at CMC Markets UK: “As we look ahead to today’s European open the main focus will be on US CPI numbers for August, followed by PPI tomorrow, as hopes grow that we may well have seen the peak, in the US at least.”

“Before that we get to parse some important UK economic numbers.”

“Have we seen peak UK CPI in the wake of last week’s huge energy price package?”

“We should find out tomorrow, but before that we have the latest unemployment numbers for the 3 months to July which is expected to remain unchanged at 3.8%.”

“Of much greater importance will be the latest average weekly warnings numbers which, while quite strong, are well below the cost of living, although they have been rising at a steady rate since January, when wage growth was at 3.8%”

Read more on Proactive Investors UK

Disclaimer

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.