Although the outcome of this week’s Bank of England Monetary Policy Committee meeting, due on Thursday, is unlikely to see any change to interest rates, following a hike last time out, traders will still be eyeing the latest UK labour market report on Tuesday for clues as to the bank’s next move.
Economists at RBC Capital pointed out in a preview of the data that, as has been the case for a number of months now, the focus for the unemployment report will again be on wages and whether the difficulties employers are having filling vacancies - which has been flagged by recent surveys - will begin to be reflected in a pick-up in earnings growth.
The economists said despite unemployment falling to 4%, that hasn’t been the case so far this year, as whole economy pay growth slowed to 2.4% year-on-year growth in the three months to June, compared to 2.8% for the three months to in January.
However, they added, it doesn’t seem as if that labour market tightness will translate into an acceleration in wage inflation just yet.
The RBC economists concluded: “We expect whole economy earnings growth to remain unchanged at 2.4% 3m/yr (though with the including bonus measure showing a slight pick-up). For the unemployment rate, we expect it to hold at 4% this month.”
US still the key for Ashtead
On the corporate front, US-focused tool hire firm Ashtead Group PLC (LON:AHT) will be the main focus on Tuesday, with the FTSE 100-listed firm scheduled to issue results for the three months to the end of July.
Ashtead’s last trading update was boosted by repair work done in the wake of hurricanes Harvey, Irma and Maria, but the climate may not have been so helpful this time round as the UK market remains competitive, although the company’s Sunbelt business continues to thrive in the US.
Numis Securities remarked in June that, anecdotally, US construction sites have around US$25mln of Sunbelt rental equipment that would previously have been owned by a construction company, which the broker said is “clear evidence of the structural shift towards a rental model”.
An acquisition in August 2017 doubled the size of the Sunbelt Canada business and Numis continues to believe the Canadian market offers a “significant opportunity” for the group.
The broker said it would not be surprised were capital expenditure in the current fiscal year to be at the top end of the range, based on the strength of trading.
JD Sports expansion plans eyed
Investors in sports gear retailer JD Sports Fashion PLC (LON:JD.) will be looking out for any more news regarding the international expansion of the firm when it releases interim results on Tuesday.
In a statement ahead of its annual general meeting in June, JD’s chairman Peter Cowgill said the group was on track to meet its expectations for the full year, adding that the group was “excited about the opportunity ahead of us” following the acquisition of Finish Line in the US.
There will also be speculation regarding whether the firm can surpass its record profits last year when an ‘athleisure’ craze drove its pre-tax profits up 24% to £294.5mln.
Weaker Kraken to drag on Cairn Energy
Joint venture partnerships don’t come with any obligation for ‘spoiler alerts’ so, by the time Cairn Energy PLC (LON:CNE) releases its half year results today, the market already knows that the Kraken North sea oil field has been operating below expectations.
EnQuest PLC (LON:ENQ), a 50% stakeholder in Kraken, revealed last Friday that the field had yielded an average of 31,000 barrels during the first six months of 2018, impacted by water injection issues during the second quarter.
One analyst noted that the injection issue had now been resolved and whilst Kraken is still performing “well below expected peak production”.
Aside from Kraken, investor attention will also be on the group’s Cairn India tax arbitration, for which an outcome is anticipated in the fourth quarter.
Significant events expected on Tuesday September 11:
Trading updates: Ashtead Group PLC (Q1) (LON:AHT)
Interims: Cairn Energy PLC (LON:CNE), JD Sports PLC (LON:JD.), DP Eurasia NV (LON:DPEU), ECSC Group PLC (LON:EUSP), EU Supply PLC (LON:EUSP), Hilton Food Group PLC (LON:HFG), Harworth Group PLC (LON:HWG), Midwich Group Plc (LON:MIWD), Nucleus Financial Group PLC (LON:NUC), The Simplybiz Group PLC (LON:SBIZ), Sanne Group PLC (LON:SNN), STM Group Plc (LON:STM), Silence Therapeutics PLC (LON:SLN), Surgical Innovations PLC (LON:SUN), Team17 Group PLC (LON:TM17), TP Group PLC (LON:TPG), Ventura PLC (LON:VEC)
Finals: Alumasc Group PLC (LON:ALU), CPL Resources PLC (LON:CPS), K3 Capital Group Plc (LON:K3C)
Economic data: UK unemployment, average earnings; German ZEW business sentiment data; US wholesale inventories; US JOLT job openings