Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
The number of people in work in the UK is at its highest level since records began, according to today’s report from the Office for National Statistics (ONS).
This morning‘s figures show the UK employment rate hit 76.5% for the final quarter of 2019, 0.6 percentage points higher than a year earlier and a 0.4 point rise on the previous quarter.
The measurement takes into account those aged between 16 and 64, with today’s reading the highest since 1971. The rate has seen broad growth over the past eight years, with more women in the workforce a notable contributing factor.
This comes on the back of changes to the state pension, meaning fewer women are retiring in their early sixties. For October to December 2019, the rate of women in employment reached 72.4%, another record high.
The overall figures might come as a surprise, with the months before the election providing little in the way of political certainty, as well as a slowdown in the manufacturing sector. But despite the questions round post-Brexit trade still hanging over UK Plc, the unemployment rate continued to flatten, sitting at 3.8%.
According to the ONS, an estimated 1.3m people were unemployed during the quarter - 73,000 fewer than the previous year and 580,000 fewer than five years earlier.
Three IHS Markit/Cips Purchasing Managers Index (PMI) surveys out earlier this month suggest some optimism is in the air among the nation’s companies, perhaps down to having one unknown taken off the table after December’s clear election result. Businesses muddling through the uncertainty since the EU referendum now look to be in higher spirits. Manufacturing, construction and services PMIs showed a marked improvement on the previous survey - UK Plc will be hoping the confidence continues through any eventual knock-on effects of the coronavirus.
But today’s upbeat figures had a sting in their tail, with the news that earnings growth disappointed, coming in at 2.9%, down from 3.2%. This measure looks at average weekly earnings including bonuses and brings back the possibility that the next move for UK interest rates could be downward.
The UK’s high street continues to act as a bellwether for consumer confidence, and while businesses might be starting 2020 off positively, the true evidence will be pounds hitting tills - slower earnings growth will do little to encourage this. We haven’t seen signs yet of consumers getting past the political and economic uncertainty and only time will tell if a lift in jobs translates to increased spending.
For many investors, the prospect of interest rates maintaining their shallow trajectory means risk assets are still the best destination for long-term savings.
Investors starved of yield and sliding up the risk scale in search of income often look for companies with defensive characteristics like high levels of recurring revenue, strong distribution networks and dominant market positions. I caught up with Julian Fosh recently, co-manager of the Liontrust UK Growth Fund (a Fidelity Select 50 fund and one of Tom Stevenson’s fund picks for 2020) to see how he factors these aspects into running the UK-focused portfolio.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Select 50 is not a personal recommendation to buy funds. Equally, if a fund you own is not on the Select 50, we're not recommending you sell it. You must ensure that any fund you choose to invest in is suitable for your own personal circumstances. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.
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