Employment Data, Interest Rates and Growth
|
|
 |
Trading Features / Strategies from Simon Denham of Capital Spreads.
Employment prospects are finally moving in the direction that the events of the last six to nine months would have led us to expect. Hiring in May was the lowest for five years as companies start to draw in their horns and batten down the hatches for a possible sharp slump on the high street.
For the first time in a great many years it appears that employers are gaining the upper hand as more and more people join the labour pool. In the Bank of England’s fight against inflation this would appear to be the best news they have had for a while. The one thing that wipes out any attempt by a central bank to rein in inflationary trends is if employers are being forced to pay ever-higher wages to attract staff. Whilst the one off impact of currency and commodity price hikes will work their evil way into the numbers the MPC can at least sit back in the knowledge that that an inflation/wage spiral is becoming less probable. Of course, nowadays, the difficulty and expense in laying off even the most incompetent worker will mean that the jobs data may continue to flatter to deceive and small to medium sized companies will probably suffer profit squeezes rather than risk the tribulations of any redundancies.
In line with the weakening of the jobs market, Nationwide has brought out its latest consumer confidence numbers this morning showing that this has fallen to the lowest level in four years, a piece of data which will not exactly have surprised the average reader of this column. Spending power of virtually everyone apart from the super rich will have suffered in the Bunsen burner heat of petrol, food, tax etc’s above average price action. Purchasing intentions over ‘big ticket’ (cars, pc’s white goods, houses) items are at their lowest since 2003. These are the one part of the inflation matrix that is well under control.
Financial Spreads >>
"With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." >> read
Financial Spreads review.
|
The BOE is struggling to balance the fight against inflation with the need for at least some growth. There is not much point in announcing you have defeated the price inflation demon if at the same time you no longer have an economy capable of taking advantage of it. The sentiment is for no interest rate cut tomorrow which will leave UK base rates at 5% still well below the ‘real’ market rates as experienced by everyone from Building Societies to Mortgage holders. It is this that I fear is not being taken into account by the MPC. The fact is that for all the cuts from 5.75% to the current level the actual three month Libor lending rate is higher than it was at the beginning (yesterdays fixing was 5.86%). The market has, in effect, been doing the MPC’s inflation busting job for them. For anyone to claim that the central bank has eased lending over the past year would be making the statement in the face of the actual facts on the ground.
With Bradford and Bingley and the other high street banks’ share prices drifting lower and lower by the day the appetite for lending risk is shrinking by the minute. The fact is that, notwithstanding whatever the BOE does, market forces will do far more to reign in economic growth (and thus inflation) in the medium to long term.
The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
Capital Spreads >>
"With Capital Spreads you get all the normal
advantages of Spread Betting plus..." >> read
Capital Spreads review.
|
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Employment Data, Interest Rates and Growth' edited by SD, updated 04-Jun-08
Related Articles:
Daily Spread Betting Blog, updated 22-May-12
In mid-morning trade the FTSE 100 has made a solid start and has continued its push higher. A strong finish in US markets saw the Dow Jones closing on the highs of the...read article: Daily Spread Betting Blog.
Spread Betting Prices, updated 22-May-12
Spread betting prices - a live spread betting price guide plus which spread betting companies offer live prices, how to use them and...read article: Spread Betting Prices.
Spread Betting Guide, updated 21-May-12
Spread Betting Guide: What is spread betting, how to spread bet, spread betting advantages, spread betting examples and...read article: Spread Betting Guide.
Spread Betting Guide to Making a Trade, updated 21-May-12
Spread Betting Guide to Making a Trade: A step-by-step guide on how to place a spread bet including a fully worked example and...read article: Spread Betting Guide to Making a Trade.
Stock Market Opening and Closing Times, updated 21-May-12
Stock Market Opening and Closing Times: a look at when the leading European, US and Asian stock markets open and close. Plus, where to get stock market index trading analysis, news and...read article: Stock Market Opening and Closing Times.
Spread Betting v Share Trading, updated 21-May-12
Some people see spread betting and standard trading as two different sides of the same coin. Whilst the pair do share similarities, it is fair to say that...read article: Spread Betting v Share Trading.
Sectors Spread Betting, updated 21-May-12
Sectors spread betting is a convenient way of taking a position on an entire industry by giving investors exposure to a basket of underlying stocks in a particular sector. Sectors are groups of firms that all...read article: Sectors Spread Betting.
First Page << 1 2 3 4 5 6 7 8 9 10 11 12 >> Last Page
Also see:
Trading Features / Strategies Index – an index of all the Trading Features.
|
|
Q) Average Trading Results?
A) Get free spread betting tips, offers, price updates, important news and more!
|
|
