UK Jobs Growth

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  • December 23, 2019

The UK labour market surprised economists by posting a 24,000 increase in jobs over the three months to October, against the -15,000 expected. Given the level of political uncertainty that was present in October the rate of growth is encouraging. Furthermore, the increase was driven by a 66,000 rise in full-time posts and a 41,000 fall in part-time positions suggesting that there was an even greater demand for labour than the headline figure would suggest. Wage growth continued to moderate with regular pay falling from an annual rate of 3.6% to 3.5%, although this is still well above the rate of inflation, which has also drifted lower. While this data is encouraging, employment is a lagging indicator and the weaker end to the year for the economy may start to come through over the coming months. However, with the election now over, a flurry of activity and hiring may now be taking place.

US Manufacturing Output

The manufacturing sector in the US grew by 1.1% last month, ahead of the 0.8% expected and rebounding strongly from the 0.9% fall in the prior month. The gain was mostly due to a 12.4% jump in motor vehicle production, reversing the declines seen in September and October during the General Motors strike. While there is not much scope for another boost in December’s figures, there were still some early signs of an improving manufacturing sector. The US benefitted from a slight improvement in global manufacturing, particularly in electronics. However, the news that Boing will suspend production of the 737 Max aircraft will undoubtedly impact production in the early 2020 data, although this may be reversed by the second half of the year. Unfortunately though, it will make the headline data more volatile and challenging to interpret.

Bank of England holds rates

The Monetary Policy Committee (MPC) elected to hold UK interest rates at 0.75%, opting to wait and see if the economy will receive an election bounce. With inflation under control and the economy struggling to accelerate, two of the committee members voted to cut rates, mirroring the previous decision. However, the committee did note that if global growth fails to stabilise or if Brexit uncertainties remain entrenched, they may act to stimulate the economy by cutting rates. Additional news was released last week confirming that Andrew Bailey, the current chief of the FCA will replace Mark Carney as Governor of the Bank of England (BOE). Bailey was the front runner for the role and is in effect an inside hire for the BOE. As Andrew Bailey has never sat on the MPC before there is little insight into the direction of interest rates although most commentators are expecting that conditions will remain the same.

Market Data

  % 1w* % 1m*
UK 3.12% 4.6%
US 3.98% 2.67%
Europe ex UK 3.61% 2.05%
Japan 1.58% 0.56%
Emerging Markets 4.29% 4.30%
Oil 3.81% 6.65%
Gold 2.28% -0.93%
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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.