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US job growth expected to pick up slightly in Friday’s non-farm payroll report

The US economy is expected to have added 162,000 jobs in June, up from the pitiful 75,000 that was added in May

us construction workers
Friday’s numbers will likely play a big part in influencing the Fed’s rate decision later this month

As is often the case, Friday looks set to be a fairly quiet affair in the Square Mile.

There are a handful of trading updates due, including from building materials seller SIG PLC (LON:SHI) and Ukraine-focused iron miner Ferrexpo POL (LON:FXPO), as well as traffic figures from British Airways-owner International Consolidated Airlines Group PLC (LON:IAG).

Macro news will likely take centre stage though, with the latest US jobs reports set to be published on Friday afternoon, and another poor reading would support expectations that the Federal Reserve will cut interest rates later this month.

The consensus among economists is for the US to have added 162,000 jobs in June, up from just 75,000 in May. That was the weakest rise since the end of the recession in mid-2009, although the jobless rate did hold at 3.6%.

The Federal Reserve decided to keep rates on hold in June despite the slowdown in the number of jobs added to the economy. However, the central bank said uncertainties about the economic outlook have increased and it would “act as appropriate to sustain the expansion”.

Policymakers are widely expected to cut rates this month so markets will be assessing the jobs report to see whether looser monetary policy is justified to bolster the economy.

Europe a focus for SIG

Back on the companies front, SIG’s update will be closely eyed after the first four months of the year saw mixed trading, with Europe up 2.7% and the UK down 9.2% for a total group like-for-like decline of 2.6%.

Having tackled problems at its UK distribution arm first, SIG’s German and French units are now in focus, with a review on the Air Handling arm also ongoing.

Analysts at Jefferies forecast that the FTSE 250-listed firm’s sales will continue to contract into May and June and so see the full interim results - at a date yet to be confirmed - “as a bigger potential catalyst for the share price, as this is when it will be seen if management’s expectation of a strong profit uptick in 1H19 has materialised”.

They noted that investors are still likely to seek reassurance that SIG’s operations in France are normalising after a ransomware attack in April, and that there are no signs of significant deterioration in any of the group's markets.

“Given the step-up in UK political uncertainty in recent weeks and weaker data (e.g. construction PMI), we see scope for a more cautious tone towards the UK, but expect the outlook towards Europe to remain sanguine,” the Jefferies analysts said.

Significant events expected on Friday July 5:

Trading updates: SIG PLC (LON:SHI), Ferrexpo PLC (LON:FXPO)

Traffic figures: International Consolidated Airlines Group PLC (LON:IAG)

Economic data: US non-farm payrolls, average hourly earnings

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