UK Jobs Growth Continues

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  • April 24, 2019

Data released last week by the Office for National Statistics (ONS) showed that the UK economy continued to add jobs at a rapid pace over the three months to February. 179,000 jobs were created in the quarter, taking the total in employment to a new record high of 32.72m. Year on year, employment has risen by 457,000, which was entirely due to increases in full time jobs, rather than part time or self-employment. Over the quarter, there has also been a marked increase in the number of women entering the workforce, supporting anecdotal evidence that employers are targeting working mothers with more flexible working hours. As a result, the economic inactivity rate fell to 20.7%, the joint lowest on record.

Tighter labour market conditions have continued to put upward pressure on wages, with average hourly earnings increasing by 3.5% over the year to February. Such an increase will mean that workers will enjoy real pay rises, which should help stimulate consumption.

UK Inflation undershoots again

Unexpectedly, UK inflation remained stable during March at 1.9% as slowing food and video game prices offset rising fuel and clothing costs; the expectation was for an increase to 2%.

The current rate will be a boost to households with wage growth continuing to outpace price rises.  This is a continued relief for consumers who, since the 2008 financial crisis, have faced the worst decade for real wage growth since the 19th century Napoleonic wars. This revival of consumer spending power, coinciding with the further falls in unemployment (as mentioned above) means that the UK customer is better positioned to cope with Brexit-related uncertainties.

Greek Bond Yields Drop

Following the country’s return to the international capital markets, Greek government bond yields have fallen dramatically. The yield on a 5-year Greek government bond is now 2.2%, down from 3.3% in February. The bond is now yielding less than its US equivalent, albeit in a different currency.  The fall in borrowing costs illustrates the progress the country has made towards increasing its tax base and reforming government spending. The government now runs a budget surplus, which together with stronger economic growth will help shrink the still excessive debt burden. Nevertheless, there are likely to be many years of spending discipline required before the debt is cleared.

Data

Index Open Close Change % Change
FTSE 100 7437 7495 58 0.78
S&P 500 2907 2900 -7 -0.24
Dax 11999 12222 223 1.86
Cac 40 5502 5580 78 1.42
Nikkei 225 21870 22200 330 1.51
UK 10 Year Gilt Yield 1.21 1.20 -0.01 -0.83

Posted By Will Dickson

Chief Investment Officer Will Dickson is a Chartered Wealth Manager as part of the Chartered Institute of Securities and Investment (CISI) qualification scheme. This recognition was obtained following an MSc in Finance and Investment from the University of Exeter, and an Accounting and Finance BSc from the University of Bath. Will’s exceptional talent is recognised by CityWire’s Wealth Manager, having been named as one of the UK’s Top 30 investment managers under the age of thirty for the last three years. Will manages and oversees P1’s range of investment portfolios. Working with the Investment Team, Will shapes the investment policy and fund selection for our Passive, Hybrid and Ethical and Sustainable portfolios. In conjunction with managing the fund portfolios, he oversees and our AIM Inheritance Tax and Tier 1 Investment Visa equity portfolios. Will has joint written articles with P1’s Head of Research, Dr Rayer. Their article “Hypothesis: Risk, like Mass and Energy, can neither be created nor destroyed” featured in the CISI’s The Review of Financial Markets. In addition to contributing to articles with Dr Rayer, Will often delivers P1 CISI Endorsed lectures to Independent Financial Advisers. You can see Will’s take on weekly investment news here.