Full-year results on Tuesday from Ashtead Group PLC (LON:AHT) could show that the construction equipment hire firm has seemingly weathered the coronavirus pandemic well so far.
Key US rental revenues are still expected to fall by 15% year-on-year, but that is less than some forecasters fear.
The FTSE 100-listed group has indicated that it saw some improvements in the second half of April, however, the firm has still made drastic cuts to its spending, as well as putting merger activity and a share buyback on hold.
Looking ahead, the outlook for the construction industry is likely to remain the key factor impacting Ashtead, particularly with more signs that the world economy is heading for an almost unprecedented contraction.
While government infrastructure spending may help boost the sector somewhat, a more general downturn is likely to hit overall construction activity, meaning lower demand for the company’s equipment.
This downturn could also imperil Ashtead’s dividend growth streak, which has continued since 2005. Analysts are already predicting a final dividend of 35.8p, which would amount to a cut from last year’s payout.
UK jobless news still to be dire
The first of this week’s big batch of UK economic data will arrive on Tuesday with April ILO unemployment data and May jobless claims.
The latest US payrolls data provided a big shock at the start of this month, with the adding back of furloughed staff helping the US economy to show a surprise growth in job creation in May.
This sort of effect is unlikely to be seen in the latest UK unemployment numbers, however, which are expected to show the impact of the 856,000 jobless claims which came through in the April numbers and likely push the UK unemployment rate up to 4.6%, after several months at multi year lows.
In terms of the jobless claims numbers, while furlough schemes are likely to take the edge off the amount of claims in the short term we already know from various job loss announcements that have been coming from a wide range of UK companies that the labour market is likely to become much more difficult in the weeks and months ahead, and that the real unemployment rate is already much higher than the headline level.
US retail sales to continue surprises?
After the shock positive payrolls report, there has been some optimism that the US economy could also see consumer spending rebounding in May, after three consecutive monthly declines.
In April US retail sales dropped by a record -16.4%, but some recent retail reports have seen on-line sales break records across the board.
This appears to have raised expectations that there might have been a positive rebound last month as coronavirus lockdowns got eased across the US, with a rebound in the region of 6% forecast.
Significant announcements expected on Tuesday:
Finals: Ashtead Group PLC (LON:AHT), Eckoh PLC (LON:ECK), Braemar Shipping Services PLC (LON:BMS), Checkit PLC (LON:CKT), Tatton Asset Management PLC (LON:TAM), Telecom Plus PLC (LON:TEP)
Interims: Oxford Biodynamics PLC (LON:OBD)
Economic data: UK employment data, US retail sales