Friday preview: US govt shutdown delays payrolls report; Wetherspoons results in focus

(Sharecast News) - What was meant to be the highlight of the week in terms of macro news will no longer be released on Friday, with the latest non-farm payrolls report delayed due to the US government shutdown. The latest jobless claims figures were also not released on Thursday due to the shutdown.

David Morrison, senior market analyst at Trade Nation, said: "This means that vital data on the state of the US labour market will now be missing. This can only make life harder for the Federal Reserve ahead of its next monetary policy meeting at the end of this month.

"The Fed has made it clear recently that it is concerned about the jobs market following two disastrous BLS payroll reports along with some thumping negative revisions."

On Wednesday, data from ADP showed that US private sector employment unexpectedly fell in September.

Employment declined by 32,000 from August, versus expectations for a 45,000 increase. Meanwhile, the August figure was revised to show that 3,000 jobs were lost rather than 54,000 created.

Small businesses with fewer than 50 employees shed 40,000 jobs, while medium businesses with between 50 and 499 employees lost 20,000 jobs. Large business with more than 500 employees added 33,000 jobs.

The service sector saw a 28,000 drop in jobs, while the goods-producing sector shed 3,000 jobs.

Morrison pointed out that investors responded positively to the data, working on the assumption that "bad news is good news".

"The theory behind it is that the Fed is now more likely to cut rates twice before year-end due to growing concerns about the state of the labour market," he said. "That may be the case. But it could also mean that the central bank holds off from cutting this month if FOMC members feel they have a lack of clarity, given the missing data releases."

On the corporate front, full-year results are due from pub chain JD Wetherspoon.

Derren Nathan, head of equity analysis at Hargreaves Lansdown, said: "JD Wetherspoon has been resilient this year, and expects to post like-for-like sales growth of around 5.1% in final results next week. However, the additional cost burden from higher wages and taxes means that profit growth is proving harder to come by. Analyst forecasts imply that operating profit has flatlined at around £140 million.

"Meanwhile, the company's guided that net debt will land at around £720 million, up from £660 million a year earlier. It's no surprise therefore that the market expects the recently re-introduced dividend to remain flat at 12p per share. But this can't be assured.

"Attention will be firmly focussed on the outlook. Some signs of sluggishness in the pubs and restaurant sector are already evident in the early part of this year. Some think the group remains competitive, but challenging conditions could be exacerbated if the November budget reveals either further cost increases or a squeeze on spending power."

Friday 03 October

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