Wall St and job figures to fuel jitters
Monday 14 April 1997
The sharp fall in the Dow Jones, driven by inflation worries, took the index below 6,400 for the first time this year and resulted in US share prices retreating for the fifth week in a row.
The key day for UK economic data is Wednesday when the publication of unemployment and average earnings figures will give an indication of the strength of inflationary pressures in the domestic economy.
The market is looking for a further fall in unemployment in March of between 40,000 and 50,000 following February's 68,000 decline. Average earnings rose to 5 per cent in January fuelled by bonus payments in the City, and are expected to remain around the same level.
However, if the fall in unemployment is considerably more pronounced, dealers may conclude that it makes an increase in interest rates more likely after the election.
Separately, Incomes Data Services said that pay rises were keeping ahead of inflation with more than half this year's settlements running at 3- 3.5 per cent. Only one in 10 was below the headline inflation figure of 2.7 per cent.
Elsewhere, producer price figures due out today are expected to show little in the way of inflationary pressures while Thursday's Retail Price Index is forecast to show a slight dip in the underlying rate of inflation from 2.9 per cent in February to 2.8 per cent in March.
Input prices are forecast to have fallen year on year by around 6.5 per cent thanks to the strength of sterling while output prices are not expected to have increased year on year by more than 1.5 per cent.
John Shepperd, chief economist at Yamaichi, said: "The implication should be that, whilst rates are going up, the extent of the rise will turn out to be modest - possibly no more than 0.5 per cent on base rates."
Simon Briscoe of Nikko Europe, meanwhile said there was a case for an incoming Labour chancellor to leave interest rates unchanged. He said that a rate rise would do nothing to combat the biggest problem for the economy - the strength of sterling.
Moreover, Gordon Brown might resist being "railroaded" into moving on rates given that Labour had made so much play about needing to look over the books and overhauling the policy framework for interest rate decisions.
Missing Malaysia Airlines Flight MH370: Wreckage could be found within a week as search reaches 'very critical juncture', says minister
The man they forgot to lock up: Mike Anderson was sentenced to 13 years in jail, but the police never came
Unbeliebable: The White House offers 'no comment' to anti-Justin Bieber petition
Loch Ness Monster found on Apple Maps?
South Korea ferry disaster: Families watch as remains of Sewol victims returned to shore
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
'Sinful': Video of British Muslims dancing to Pharrell Williams's hit Happy comes under attack
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
An open letter to Nigel Farage: you may smile, but I am not seduced
Abdullah Deghayes: My son was the martyr of a just cause, says father of British teenager killed in Syria conflict
- 1 Easter egg hunt horror as mother finds dead body under deck of house
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Unbeliebable: The White House offers 'no comment' to anti-Justin Bieber petition
- 4 Loch Ness Monster found on Apple Maps?
- 5 Criminals ‘using unmanned drones and infrared cameras to find illegal cannabis farms’ – and then steal from the growers
iJobs Money & Business
Negotiable: Harrington Starr: Database Team Lead ( Leadership, Sybase, Compute...
£40000 - £50000 per annum + Bonus+Benefits+Package: Harrington Starr: C#.NET D...
£25000 - £35000 per annum + Bonus+Benefits+Package: Harrington Starr: VB.NET S...
£45000 - £55000 per annum + Bonus and Benefits: Harrington Starr: Trade Suppor...