London pre-open: Stocks seen up as investors mull jobs data

(Sharecast News) - London stocks were set to rise at the open on Tuesday following an upbeat session on Wall Street, as investors mulled the latest UK jobs data. The FTSE 100 was called to open 27 points higher at 7,597.

Figures released earlier by the Office for National Statistics showed that wage growth strengthened in the three months to April, while the unemployment rate dipped.

Average total pay including bonuses grew 6.5% and regular pay excluding bonuses grew 7.2% in February to April. For regular pay, this marked the largest growth rate seen outside of the Covid pandemic.

Meanwhile, the unemployment rate came in at 3.8%, up from 3.7% in the previous quarter but down on the 3.9% reported a month earlier and below expectations of 4.0%.

ONS director of economic statistics Darren Morgan said: "With another rise in employment, the number of people in work overall has gone past its pre-pandemic level for the first time, setting a new record high, as have total hours worked.

"The biggest driver in recent jobs growth, meanwhile, is health and social care, followed by hospitality.

"While there has been another drop in the number of people neither working nor looking for work, which is now falling right across the age range, those outside the jobs market due to long-term sickness continues to rise, to a new record."

In corporate news, housebuilder Bellway said it expected lower output and average prices due to a weaker order book and an uncertain interest rate environment.

The company maintained guidance that it would deliver full-year volume output of around 11,000 homes, compared with 11,198 in the 2022 fiscal year with an overall average selling price of around £300,000, down from £314,399 at the end of July last year.

"Overall reservations in the period have been lower than the prior year, however, we have been encouraged by the levels of customer interest and the seasonal uplift in demand," the company said in a trading update for the five months to June 4.

"In financial year 2024, given our reduced order book, lower prevailing reservation rates and the uncertain interest rate environment, we continue to expect a lower year-on-year volume output.

"While customer interest is currently healthy, the board remains mindful that cost of living pressures and the uncertain path of future interest rates could impact housing demand."

Elsewhere, British Gas owner Centrica said it expected annual earnings to be at the top end of expectations, driven by "significantly higher" profits at its retail division as customers struggle with soaring energy prices.

It added that first half net cash generation was also expected to be "robust.

"The company's performance over the first five months of the year, across its diverse and balanced portfolio, has been strong overall," Centrica said.

Retail adjusted operating profit in the first half of 2023 was expected to be significantly higher than in previous years, driven by a material positive impact in British Gas Energy from allowances in the UK domestic default tariff cap relating to costs incurred in prior periods, Centrica said.

"Given our current outlook, we expect 2023 full year group adjusted earnings per share to be around the top end of the range of recent sell side analyst expectations, with adjusted earnings per share heavily weighted towards the first half."