Unemployment, Inflation, Retail Sales: 3 Things to Watch in UK Markets This Week

As the UK economy and markets navigate through the continued uncertainty, investors are closely watching key indicators for signs of strength or weakness. 

This week, three crucial data sets will shed light on the economy’s health: unemployment data, inflation, and retail sales. In addition, we have earnings releases from some well-known names such as Burberry and Aviva.

1. Unemployment Data: Gauging the Labour Market

On Tuesday, the latest UK unemployment data will be released. In the previous reading, the jobless rate held steady at 4.2%. However, it’s important to note that this was under a new calculation accounting for dwindling household survey responses. Reuters explains more here

The upcoming reading is forecast to creep up to 4.4%. The data is closely watched by the BoE, providing an update on the overall health of the labour market. 

2. Inflation: Expected to Ease

Inflation remains a top concern for policymakers and investors alike. The latest inflation data will be released on Wednesday, and it is expected to ease significantly.  

The September reading came in at 6.7%. However, the forecast shows it is anticipated to ease to 4.9%, while the consensus expectation is 4.8%. 

Last week, Bank of England Chief Economist Huw Pill said it is essential interest rates stay at their current level to tame inflation. In a presentation to the Institute of Chartered Accountants in England and Wales (ICAEW), he stated that the restrictive response “has to be persistent in order to squeeze the inflationary situation out of the system.”

3. Retail Sales: Assessing Consumer Spending

Retail sales figures are expected on Friday, providing a snapshot of consumer spending, a crucial driver of economic growth. 

The previous reading came in at -0.9%, although the forecast for October is 0.2%, with the consensus at 0.3%. 

Barclays revealed last week that spending on its debit and credit cards between September 24 and October 21 was 2.6% higher than a year earlier, representing the smallest annual increase since September 2022 and below growth of 4.2% the month before. They stated that consumer spending eased in October due to concerns over rising energy bills and Christmas costs.

“Half of Brits are cutting back on discretionary purchases to help offset rising energy bills, while October’s unseasonably warm weather delayed new clothing purchases,” the bank stated. 

If retail sales continue to slow, the recession fears will surely be ramped up once again. 

FTSE 100

The FTSE 100, the UK’s blue-chip index, closed last week down 0.8% after US Federal Reserve Chairman Jerome Powell’s comments prompted renewed caution following comments that pushed back against the narrative of an end to the rate-hike cycle. 

Burberry’s Interim Earnings: A Window into the Luxury Goods Sector

Next week, watch for luxury goods powerhouse Burberry’s interim earnings on Thursday, November 16.

There has been some caution from investment bank analysts regarding the luxury fashion sector, which is often seen as a bellwether for consumer confidence and discretionary spending. Investors will be keen to assess the company’s performance in a challenging economic environment. 

Elsewhere, insurance firm Aviva will release a Q3 update. You can see the names reporting this week here.

By Sam Boughedda