With UK inflation hitting 3% in September, as expected, Wednesday’s UK labour market data is expected to show wage growth lagging once again, with the increase of 2.1% in average earnings for the three months to July leaving workers suffering a 0.4% decline in real wages.
The drop in real wages in July overshadowed an 181,000 increase in employment in the period and a 75,000 fall in unemployment, with the jobless rate down to 4.3% from 4.4%.
The Bank of England has signalled that interest rates may need to rise in coming months in the face of inflation overshooting its 2% target and with unemployment staying low, although Bank of England Governor Mark Carney said on Tuesday that the central bank still has to balance the need to support job creation and growth with an inflation rate that is running above its target.
Reckitt has something to prove
On the corporate front, health-to-hygiene group Reckitt Benckiser PLC (LON:RB.) issues a third quarter trading update which will be a chance for boss Rakesh Kapoor to prove that the company is back on track after its profit warning in early July.
The FTSE 100-listed firm then abandoned its target to grow sales by 3% on an underlying basis, cutting that to 2% as it cited a cyber-attack in June, changes to India’s tax system and ongoing problems at its Korean operations where one of its humidifier disinfectants was linked to a number of deaths.
Reckitt’s sales fell 2% on a like-for-like basis in the second quarter, after a flat showing in the first, so the group is still assuming the second half will show marked acceleration.
The update will also be the first to feature Mead Johnson, its £13bn US infant nutrition acquisition, for a whole quarter.
Rathbone flows to grow
Meanwhile investment firm Rathbone Brothers PLC (LON:RAT) will also issue a third quarter trading update on Wednesday, a period which saw the firm enter and terminate £2bn merger discussions with privately-owned peer Smith & Williamson.
Analysts at Barclays Capital are forecasting Rathbone to report investment management flows of £0.3bn, in line with the previous two quarters, plus a further £0.1bn of unit trust flows, bringing overall group flows to £0.4bn.
The analysts expect the FTSE 250-listed firm to report assets under management of £37.1bn as at the end of September, split between £32.3bn for investment management and £4.8bn for unit trusts.
And they forecast the group’s underlying third quarter operating income rising by 7% year-on-year to £70.5mln, with the market keen to hear any management commentary around the business outlook and regulation.
Significant events expected on Wednesday October 18:
Economic data: UK unemployment; UK average earnings; US housing starts; Fed Beige Book published
Trading updates: Reckitt Benckiser Group PLC (LON:RB.), Rathbone Brothers PLC (LON:RAT)
Interims: U And I Group PLC (LON:UAI)