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US non-farm payrolls data in focus as Federal Reserve's interest rate decision looms

The day ahead includes the US non-farm payrolls report and interim results from Berkeley
workers
A weak jobs report could cast doubts on bets the Fed will raise interest rates this month

The latest US jobs report on Friday will be in focus as the Federal Reserve assesses the health of the labour market ahead of its December interest rate decision.

Analysts expect the Labor Department’s US non-farm payrolls report to reveal employers added 195,000 jobs in November and the unemployment rate held at 4.1%.

Average hourly earnings are forecast to rise 0.3% month-on-month after zero growth in October. Compared to the same period a year ago, growth in hourly earnings is expected to accelerate to 2.7% in November from 2.4% the previous month.

The October non-farm payrolls report had disappointed as both wage growth and the number of job adds missed analysts’ expectations.

“Of concern for the Fed is that wage growth has stalled and this raises doubts about the pace of inflation growth,” said Neil Wilson, chief market analyst at ETX Capital.

The Fed is widely expected to raise interest rates this month but a weak jobs report could cast doubts on whether it is the right time to take action.  However, other data will certainly be taken into account, including inflation, gross domestic product and the purchasing mangers’ index reports on manufacturing and services.

The central bank is due to meet on December 13-14.

London housing starts eyed in Berkeley interims

Berkeley Group Holdings PLC (LON:BKG) has been hit by a slowdown in the London housing market since the UK voted to leave the European Union.

Ahead of its first half results on Friday, the high-end housebuilder revealed in a September trading update for May 1 to August 31 that London housing starts remain 30% lower than in 2015.

The company blamed uncertainty surrounding Brexit, an increase in stamp duty property tax, affordable housing requirements, the Community Infrastructure Levy and Section 106 planning obligations.

“While Berkeley is in excellent shape, the London market continues to be adversely impacted by both, uncertainty around the terms and implications of Brexit and, the changes in recent years to SDLT (stamp duty property tax) and mortgage interest deductibility,” Berkeley said at the time.

AJ Bell investment director, Russ Mould, said the key numbers to watch out for in the first half report will be the trend in reservations, the forward order book, the average selling price and guidance for the full year.

Analysts are looking for a 3% increase in full year pre-tax profits to around £840mln, he said.

An update on management’s plans to return 800p per share to investors over the next four years through dividends and share buybacks will also be closely eyed.

 

Significant announcements due:

Interims: Berkeley Group PLC (LON:BKG)

Economic data: UK trade; UK industrial, manufacturing production; UK construction output; US non-farm payrolls, unemployment rate; University of Michigan consumer confidence


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