UK Job Growth Slows; Shop Price Inflation Eases

Arthi Gupta
08 Jun, 2011
New York City

The UK indexes fell after reports of rating downgrade. The UK job growth slowed and shop price inflation eased in May. Punch Taverns surged 7.2% after the company said it is on track to meet full-year expectations.

[R]3:40 PM London – The UK indexes fell after reports of rating downgrade. The UK job growth slowed and shop price inflation eased in May. Punch Taverns surged 7.2% after the company said it is on track to meet full-year expectations.[/R]

Moody''s warned the United Kingdom may lose its AAA rating on weak growth and fiscal delays. The rating agency’s warning was largely ignored by the market as its views have lagged the market perception.

Investors have come to rely less and less on the announcements of Moody’s and Standard & Poor’s in the last three years after the companies awarded its highest rating to some of the worst U.S. mortgage securities.

In London, FTSE 100 Index declined 36.62 or 0.62% to 5,827.11 and the pound edged lower to close at $1.636.

UK Job Growth Slows

Latest data in Report on Jobs published today by the REC and KPMG signaled an easing in growth of staff appointments during May. Permanent placements and temporary billings both rose at the weakest rates in seven months.

Although permanent staff salaries continued to rise in May, the rate of inflation eased to a three-month low. Temporary staff pay increased at the weakest rate in the current four-month sequence of growth.

UK Shop Price Inflation Eases

The UK shop price inflation eased to its weakest pace this year in May, the latest report from the British Retail Consortium showed.

The BRC-Nielsen shop price index rose 2.3% annually in May, slower than the 2.5% rise in April.

The BRC said food in May increased to 4.9% compared to 4.7% in April. Non-food inflation slowed to 0.8% in May from 1.2% in April.

Gainers & Losers

Aer Lingus Group plc fell 1% to €0.79 after the Irish low-cost, low-fares airline reported a 2.8% annual increase in traffic for the month of May, primarily reflecting the impact of the volcanic ash cloud over eleven days of May 2010.

Load factor fell 4.7 percentage points also indicating multiple bookings per passenger last year. Traffic, as measured by revenue passenger kilometers, increased to 1.34 billion from 1.30 billion a year ago.

GB Group Plc gained 0.62% to 40.50 pence after the identity management specialist reported fiscal year 2011 revenues grew 10% to £24.41 million from £22.21 million in the previous year. Profit for the year rose 39% to £2.10 million or 2.4 pence per share compared to £1.51 million or 1.8 pence per share reported a year ago.

Punch Taverns PLC surged 7.19% to 75.25 pence after the pub company said in the third quarter, the Spirit Managed business reported a 7.3% increase in comparable sales at locations managed by the company and a 0.7% decline in comparable net income.

In managed pubs comparable net income dropped 3.3% and average net income per pub rose 1.3%.

Smiths Group Plc fell 1.92% to 1,178.00 pence after the technology company said in its interim management statement for the ten months ended May 28 that it experienced growth in sales, headline operating profit and margin improvement during the period.

SThree plc rose 0.94% to 397.10 pence after the specialist recruitment business reported first-half Group gross profit increased 21.1% to £90 million from £74.3 million reported a year ago.