Brexit vs. Employment, Wage Growth, & Rolls Royce

Wednesday, 15th November: The pressure on oil from yesterday has continued to leave its mark on the index today, which opened around 0.3% lower at 7389.29. Commodity focused stocks such as Rio Tinto, BHP Billiton, Antofagasta and Royal Dutch Shell were all at the bottom end of the FTSE for the remainder of the day.

To add to the bad news, data released today revealed a drop of 14,000 in employment in the 3 months to September. Records revealed that this is the largest decline in more than two years, a great portion of which was due to the absence of people working in the 18-24 age bracket. Employment has been somewhat resilient to Brexit, until now of course, and this unexpected decline could be the commencement of the full impact of Brexit finally starting to hit home.

Another economic topic in the news today which continues to be a concern for everyone, well for those who aren’t Sir Alan Sugar or JK Rowling, is the ongoing wage growth battle. Deputy Governor of the Bank of England, Ben Broadbent, has suggested that wages should begin to rise in 2018 in line with lower unemployment, which will pressure those in charge to pay staff more for their labour. Given the most recent news of the fall in unemployment, 2018 wage growth couldn’t look further away if it tried, and could be postponed if the economy continues to sail in the current direction. Broadbent also made a point of blaming Brexit for the pause in wage growth because of the impact it has had on sterling. GBP/USD remained fairly flat throughout the day, barely down by 0.01% at 12:00 (GMT).

Besides employment and wage issues, Brexit is stirring up a fuss in the lavish and luxurious world of Rolls Royce as well. Rolls Royce executive leadership members stressed on Wednesday that border checks post-Brexit could potentially cause disruption to their global supply chain. Not only are they worried about the smooth flowing supply chain, but they’ve also expressed concerns over the ties they hold with European universities, which contribute quality talent and research to the groups’ operations.

The FTSE 100 and 250 continued to suffer for the entirety of the day, and at one point the duo even reached a seven-week low. The day ended with the FTSE 100 and 250 down by 0.48% and 0.57% respectively.

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