The UK unemployment rate was unchanged at the end of last year, but pay failed to keep up with inflation, providing further evidence of a building cost-of-living crisis in the country, figures from the Office for National Statistics showed on Tuesday.
In the three months to December, the UK unemployment rate was steady at 4.1%, in line with market expectations. The jobless rate in the three months to November also was 4.1%.
On a quarter-on-quarter basis, the unemployment rate declined from 4.3%. Compared to the three months to February 2020, so before the onset of the pandemic, the UK unemployment rate was 0.1 percentage point higher.
Annual growth in total pay - so including bonuses - was 4.3%. Regular pay, which excludes bonuses, was up 3.7%. Both failed to keep pace with the UK’s annual consumer price inflation rate in December of 5.4%. Faring the worst were public sector employees whose total pay rose 2.6%, compared to 4.6% in the public sector.
Payrolled employees climbed 108,000 monthly in December, sitting 436,000 above pre-virus levels.
‘We have been here before,’ commented Sarah Coles at Hargreaves Lansdown. ‘We suffered 12 years of falling wages after the financial crisis, and pay only got back to its pre-crisis levels on the eve of the pandemic in February 2020.
‘However, at least at that time inflation was far lower, and energy bills weren’t set to rise by hundreds of pounds overnight. This time round, it’s going to be incredibly difficult for anyone left behind.’
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,571.69
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Hang Seng: down 0.8% at 24,355.71
Nikkei 225: closed down 0.8% at 26,865.19
S&P/ASX 200: closed down 0.5% at 7,206.90
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DJIA: closed down 171.89 points, or 0.5%, at 34,566.17
S&P 500: closed down 16.97 points, or 0.4%, at 4,401.67
Nasdaq Composite: closed marginally lower, down 0.24 point at 13,790.92
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EUR: firm at $1.1310 ($1.1300)
GBP: firm at $1.3529 ($1.3520)
USD: down at JP¥115.38 (JP¥115.58)
Gold: up at $1,876.92 per ounce ($1,865.30)
Oil (Brent): up at $95.54 a barrel ($94.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday’s key economic events still to come
1100 CET EU gross domestic product
1100 CET EU flash estimate employment EU and euro area
1100 CET Germany ZEW indicator
0830 EST US producer price index
1630 EST US API weekly statistical bulletin
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The German government is reiterating its demand for Russian troop withdrawals from Ukraine’s borders, shortly before talks get under way between Chancellor Olaf Scholz and Russian President Vladimir Putin. The responsibility for a de-escalation lies ‘clearly with Russia,’ German Foreign Minister Annalena Baerbock said on Tuesday morning. ‘The fate of an entire country and its population is at stake at the moment due to the Russian troop build-up. The situation is extremely dangerous and can escalate at any time,’ she warned. Baerbock stressed the West must make it clear with ‘all consistency’ that it stands united behind a peaceful and secure Europe. Scholz and Putin are set to meet Tuesday afternoon in Moscow.
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BROKER RATING CHANGES
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RBC cuts BAT to ’sector perform’ (outperform) - price target 3,300 pence
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Barclays raises BAT price target to 4,200 (3,400) pence - ’overweight’
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RBC raises Unilever to ’sector perform’ (underperform) - price target 3,600 (3,400) pence
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COMPANIES - FTSE 100
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Glencore said revenue jumped 43% to $203.75 billion in 2021 from $142.34 billion the year earlier. The miner and commodities trader swung to a pretax profit of $7.38 billion from a loss of $5.12 billion in 2020. Adjusted earnings before interest, tax, depreciation and amortisation leapt 84% to a record $21.32 billion. Glencore set out plans for $4.0 billion worth of shareholder returns. Of this, $3.4 billion will come from a $0.26 per share base distribution in respect to 2021 cash flow, and $550 million through a share buyback. Glencore did not pay a dividend in 2020. The miner, however, had to set aside a $1.50 billion provision for probes involving the US Department of Justice, the US Commodity Futures Trading Commission, the UK Serious Fraud Office, and the Brazilian Federal Prosecutor’s Office. The US DoJ is investigating Glencore’s compliance with various criminal statutes, including money laundering and fraud laws. The CFTC’s probe is in connection with charges of market manipulation in commodities trading, while the UK and Brazil probes both are in connection with alleged bribery, the latter concerning Petrobras. Petrobras is a Brazilian state-owned petroleum company.
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Separately, Glencore has supported a £200 million funding round by low-carbon batteries firm Britishvolt, the Financial Times reported. Britishvolt said Glencore will be the cornerstone investor in its Series C financing. The miner has committed £40 million at a significantly higher valuation than its previous investment in Britishvolt, the FT said. The launch of the funding round comes weeks after Britishvolt raised £1.7 billion in sales and leaseback funding from warehouse provider Tritax and investment manager abrdn to construct its factory in Northumberland. Britishvolt’s gigafactory, which at its peak aims to produce enough cells for 300,000 electric car batteries a year, will be the UK’s fourth-largest building. To help finance the project, which could cost as much as £3.8 billion, the FT said Britishvolt has been mulling a London listing.
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AstraZeneca and Merck & Co reported positive trial results for Lynparza in combination with abiraterone in patients with prostate cancer. Results from the PROpel phase three trial showed Lynparza in combination with abiraterone reduced the risk of disease progression or death by 34% in patients with metastatic castration-resistant prostate cancer versus just abiraterone alone. Results also showed a favourable trend towards improved overall survival, however the difference did not reach statistical significance at the time of the data cut-off. The trial will continue to assess overall survival as a key secondary endpoint.
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COMPANIES - FTSE 250
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Contracts-for-difference trading platform Plus500 posted an annual earnings decline. Pretax profit fell 26% to $386.4 million in 2021 from $523.3 million in 2020, as revenue fell 18% to $718.7 million from $872.5 million. In the fourth quarter alone, however, revenue was 75% higher annually at $161.1 million. Annual revenue, meanwhile, was more than double 2019’s $354.5 million. Plus500 lifted its annual payout by a third to $1.1916 per share, from $1.7823. In addition, it plans to conduct a new $55.0 million share buyback in 2022. This includes a $25.2 million new buyback and a $29.8 million special share repurchase programme. ‘The purpose of the new programme is to further emphasise the board’s confidence in the prospects of Plus500 and reflects the robust financial position of the group, as highlighted by the group’s operational and financial performance in FY 2021,’ Plus500 said.
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COMPANIES - MAIN MARKET AND AIM
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MySale, an Australia, New Zealand and south east Asia-focused online retailer, said it is taking a ‘cautious approach’ to its full-year outlook in light of recent trading trends. The company said inventory built up in the half year that ended December 31 to A$6.2 million from A$2.6 million, as demand was hit by the spread of the Omicron variant of Covid-19. As a result, underlying earnings and cash reserves took big hits, while revenue declined by 6.4% to A$59.7 million from A$63.8 million a year before. Shares were down 39% early Tuesday in London.
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Tuesday’s shareholder meetings
Dewhurst PLC - GM re name change to Dewhurst Group PLC
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