London open: FTSE edges down after UK jobs data, ahead of payrolls

(Sharecast News) - London stocks edged lower in early trade on Tuesday as the latest UK jobs data underpinned rate cut expectations and as investors eyed the long-awaited release of US non-farm payrolls reports for October and November.

At 0840 GMT, the FTSE 100 was 0.2% lower at 9,734.67.

Data released earlier by the Office for National Statistics showed the unemployment rate ticked higher in October, in line with expectations.

The estimated UK unemployment rate rose 0.4 percentage points to 5.1%. The inactivity rate dipped 0.1 percentage points to 21%. Wages also continued to grow. Including bonuses, total earnings rose 4.7%, while regular earnings - which exclude bonuses - rose 4.6%.

Both were above consensus, for growth of 4.4% and 4.5%, but down on September's upwardly-revised growth of 4.9% and 4.7% respectively.

The biggest hike in wages was seen in the public sector, where average regular earnings growth was 7.6%, compared to 3.9% in the private sector.

Liz McKeown, director of economic statistics at the ONS, said: "The overall picture continues to be a weakening labour market.

"The number of employees on payroll has fallen again, reflecting subdued hiring activity, while firms told us there were fewer jobs in the latest period."

Estimates for payrolled employees fell by 149,000 year-on-year, and by 22,000 between September and October.

In August to October - the period comparable with the ONS's Labour Force Survey - the number of payrolled staff fell by 113,000 over the year. Vacancies remained broadly flat.

McKeown added: "The fall in payroll numbers and increase in unemployment has been seen particularly among some younger age groups."

Looking to the rest of the day, the non-farm payrolls reports for October and November - which were delayed due to the US government shutdown - will be released at 1330 GMT. Retail sales data for October is due at the same time.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "The FTSE's in the red this morning. While the Bank of England is widely expected to bring rates down to 3.75% on Thursday, today's employment figures raise the question of whether that will be enough to stimulate growth as the UK economy limps towards the new year.

"If setters stick to the playbook, rates will be at their lowest level since February 2023, but save for the exceptional circumstances of the coronavirus pandemic, unemployment of 5.1% is now at its highest level since 2016. With wage growth easing only slowly, the headroom for further rate cuts next year looks pretty tight.

"Later on, it's the turn of official US jobs numbers, which haven't been seen since before the US government shut down. Non-farm payroll numbers are expected for both October and November, with last month likely to be a cleaner-looking print. Consensus forecasts suggest around 50,000 new hires were made, less than half the 119,000 seen in September, but the range of expectations is much wider than usual.

"If recent private jobs data is anything to go by, the risk here is to the downside. With average hourly earnings expected to be up 3.7% on a 1-year view the juggling act for those with the keys to monetary policy also looks increasingly tricky stateside. That's weighing on sentiment with US stock futures pointing downwards today."

In equity markets, engine marker Rolls-Royce fell even as it announced plans for a further �200m "interim" share buyback programme. Defence firms more generally were weaker, with Babcock and BAE Systems also down after US President Donald Trump said a Ukraine peace deal was "closer than ever" following talks in Berlin.

On the upside, housebuilders Berkeley and Barratt Redrow were lifted by rate cut hopes.

IG Group rallied as it extended its share buyback and said it was confident of achieving its medium-term revenue growth targets ahead of schedule.

Recruiter SThree rose as it said it finished its financial year ended 30 November positively, with improving trends in new placements, and reiterated its earnings forecast.

Hollywood Bowl jumped as it reported a rise in annual core earnings despite a challenging backdrop for indoor leisure as customers splashed out on food and drink at its tenpin centres.

Market Movers

FTSE 100 (UKX) 9,734.67 -0.17%

FTSE 250 (MCX) 22,046.90 -0.01%

techMARK (TASX) 5,552.04 -0.52%

FTSE 100 - Risers

Convatec Group (CTEC) 234.40p 1.91%

InterContinental Hotels Group (IHG) 10,520.00p 1.79%

easyJet (EZJ) 505.20p 1.67%

Berkeley Group Holdings (The) (BKG) 3,840.00p 1.11%

Smurfit Westrock (DI) (SWR) 2,806.00p 1.08%

Hiscox Limited (DI) (HSX) 1,403.00p 1.01%

Diageo (DGE) 1,677.50p 0.90%

Mondi (MNDI) 881.60p 0.78%

Barratt Redrow (BTRW) 361.80p 0.72%

Aviva (AV.) 671.00p 0.69%

FTSE 100 - Fallers

Babcock International Group (BAB) 1,235.00p -1.91%

BAE Systems (BA.) 1,662.50p -1.83%

Melrose Industries (MRO) 552.20p -1.46%

Scottish Mortgage Inv Trust (SMT) 1,133.50p -1.09%

Rolls-Royce Holdings (RR.) 1,102.00p -1.08%

Airtel Africa (AAF) 316.40p -0.88%

Auto Trader Group (AUTO) 615.60p -0.87%

WPP (WPP) 333.90p -0.74%

The Sage Group (SGE) 1,079.50p -0.74%

F&C Investment Trust (FCIT) 1,234.00p -0.72%

FTSE 250 - Risers

IG Group Holdings (IGG) 1,210.00p 3.77%

Foresight Solar Fund Limited (FSFL) 66.90p 2.92%

Wizz Air Holdings (WIZZ) 1,262.00p 2.69%

Vietnam Enterprise Investments (DI) (VEIL) 750.00p 2.46%

Sirius Real Estate Ltd. (SRE) 93.30p 2.41%

Hays (HAS) 55.25p 2.41%

Close Brothers Group (CBG) 478.00p 1.88%

Mony Group (MONY) 191.40p 1.75%

ICG Enterprise Trust (ICGT) 1,526.00p 1.46%

SSP Group (SSPG) 188.20p 1.40%

FTSE 250 - Fallers

Empiric Student Property (ESP) 72.10p -4.50%

Ceres Power Holdings (CWR) 255.00p -4.21%

PPHE Hotel Group Ltd (PPH) 1,700.00p -3.41%

Diversified Energy Company (DI) (DEC) 1,015.00p -3.33%

Trainline (TRN) 215.00p -3.15%

Ocado Group (OCDO) 225.00p -2.89%

Oxford Biomedica (OXB) 587.00p -2.65%

Dr. Martens (DOCS) 76.10p -2.62%

Chemring Group (CHG) 470.00p -2.49%

Allianz Technology Trust (ATT) 514.00p -2.28%