As always on the first Friday of a month, events will be dominated by the latest US jobs data, especially as the talk both here and in the US is about interest rate rises, with the Federal Reserve having signalled another hike at its meeting last month.
Consensus forecasts are for non-farm payrolls to rise by about 175,000, compared to a 138,000 increase in May, though these days most economists look almost as hard at the underlying unemployment rate and changes in average hourly earnings.
If the strong jobs growth continues across the Atlantic, coupled with rising inflation, the Fed will be justified in their policy of raising rates, although if average earnings remain stubbornly low, the impact on the US consumer will be a worry.
Minutes from the June FOMC meeting, released on Wednesday, gave rise to confusion rather than providing a clearer insight on the Fed’s next policy move.
Ipek Ozkardeskaya, senior market analyst at London capital Group, said the minutes “revealed increasing tensions at the heart of the committee regarding the shortfall in inflation and a lack of understanding regarding the financial conditions that have not tightened following the Fed rate hikes since December.
“In summary, the US economy could absorb more rate tightening given that the conditions have not gotten loose enough to compromise the economic activity. Yet, the soft inflation could be a caveat to future rate hikes.”
Investors will be equally as confused if US June jobs growth undershoots, or even if it beats forecasts, depending on what the hourly earnings and unemployment rate show.
Dunelm growth under pressure
As investors wait for the key US data there will be little corporate news to provide any relief, aside from a fourth quarter trading update from mid cap homewares retailer Dunelm Group PLC (LON:DNLM).
Back with an update in April, Dunelm left its full year guidance unchanged as it said it achieved sales growth in the third quarter despite a “volatile retail environment”.
READ: Dunelm reiterates full year guidance as third quarter revenue grows
The FTSE 250-listed firm saw its total revenue for the 13 weeks to 1 April 2017 rise 11.4% to £255.1mln as the company integrated UK furniture, home and garden business WS Group - which owns the Worldstores, Kiddicare and Achia brands – bought for £8.5mln late last year.
But Dunelm then that said the homewares market remains in decline, with its total like-for-like sales dropping 2.2% in the third quarter, reflecting a 4.2% decrease at Dunelm stores, although home delivery sales jumped by 21% like-for-like.
Significant events expected on Friday July 7:
Trading updates: Dunelm Group PLC (LON:DNLM), Fenner PLC (LON:FENR)
Economic data: US non-farm payrolls for June; UK industrial and manufacturing production, UK balance of trade