Friday, 2nd September: Following on from yesterday’s manufacturing data in the UK, today it was the turn of the construction PMI. Despite still being in contraction territory (below 50), the UK’s construction PMI rose to 49.2 from 45.9 in July, demonstrating that the downturn in UK construction that has been evident since before the EU referendum result, has eased. Today’s data, together with yesterday’s manufacturing data has led to speculation to whether the Bank of England needs to further cut UK interest rates after they slashed rates to 0.25% at the start of August. Despite today’s figure, there is no getting away from the fact overall construction data has fallen for a third straight month.
Over in the US there has been anticipation surrounding the latest non-farm payrolls, released today. Many Fed members have hinted for a rate rise at the September 21st meeting, with much attention being paid to the latest employment data. Nonfarm payrolls rose by 151,000, lower than the 180,000 forecast. The unemployment rate remained unchanged at 4.9%. June and July’s jobs numbers were also revised lower. Despite the slight cool down in hiring, the figures are consistent with steady US job growth. There is now a 21% probability of a rate rise in September (the probability had been at 12% initially after the announcement), whilst a December rate hike is priced in at 55%.
Back in the UK, Go-ahead group, the co-owner of Southern Rail today reported of nearly £100m whilst at the same time apologised for major ongoing disruptions to its rail services. The service has been continuously disrupted by restricted network capacity and strike action. The group, who are also the largest bus operator in London, reported that their bus division had “had a record year” and that its business is “resilient and relatively well positioned for change”. Shares rose by >8% in mid-morning trade, rising further during the day to close at 10.41%.
The FTSE 100 spent the day in positive territory, ending the day +2.20%. The 250 reversed a negative start to close +1.42%. In Europe both the CAC and DAX ended the day in the green whilst in the US the S&P 500 and Dow Jones took the US jobs data in their stride and are currently +0.46% and +0.42% respectively. The pound gathered strength post jobs data, rising to more than $1.335 against the dollar before paring back slightly. GBP/USD is $1.329 at the time of writing.