US jobs key on Friday as election outcome remains unknown; UK housing market also in focus

Friday’s UK company diary is a lot quieter but there is likely to be lots of political noise around the US election and a little bit more around a slowing employment rebound across the Atlantic.

Frankly who knows where we will be with the US election and the incumbent administration’s legal challenges on Friday, but we know that the US non-farm payrolls (NFP) report will be released at 8.30am Eastern time, or 1.30pm in London.

The market is expecting around 600,000 new jobs to have been added in October, compared to 661,000 the month before.

Following ADP job numbers earlier this week showing 365,000 new jobs, Capital Economics’ Andrew Hunter said, “the big picture is that employment growth is continuing to slow and the new wave of virus cases is only likely to exacerbate that trend”.

While the monthly NFP are a very big deal, they will be less so this time out, according to market analyst Marshall Gittler at BDSWiss, even more so as the weekly jobless claims data has recently been taking some of the shine off.

“In any case, I think the NFP figure is going to be disappointing. Although it’s expected to show a continued rise in the number of people working, the increase is forecast to be down for the fourth month in a row, showing a slowing recovery,” Gittler said.

Housing market in focus in UK

Back in Blighty, there will be some macro data in the form of Halifax house prices. Last month’s report showed a 1.6% month-on-month increase or up 7.3% on the year. For October the monthly rise is seen softening to 0.5% but the annual gain growing to 8.2%.

In related microeconomic data, there should be an update from housebuilder Redrow PLC (LON:RDW) alongside its annual shareholder meeting, which will be an online-only affair.

Back in September’s full-year results, the FTSE 250-listed group said it expected to resume dividend payments next year as it scales back London investment to focus on regional growth plans, with the coronavirus pandemic changing house-buyers’ priorities towards larger homes with more outside space, closer to green spaces.

Redrow, which reported a 66% fall in full-year profits as its numbers of completed house sales fell even before the impact of the coronavirus, entered the new financial year with a record order book of £1.42bn, inflated from £1.02bn in 2019 by a lockdown backlog and a demand spike ahead of changes to the Help to Buy scheme.

And, like most of its peers, Redrow has been making hay while the sun shone on the housing market in the summer and early autumn, with a strong sales rate in the first 11 weeks of the new financial year of 0.84, compared to 0.68 a year ago.

While Redrow shares fell on that announcement they have come back since, but are still down around 43% since the start of the year.

“While we expect the rate to have eased a bit as many sites will only now be offering completions post the stamp duty holiday expiry, we don’t expect a major pull back,” said analysts at Peel Hunt in a preview note.

“Redrow’s product is more focused on family housing and trade-up moves so the desire for more space, gardens and home offices will be playing well with its product mix. It also shifted its product mix over the last 12-24 months such that the changes in HTB rules will have limited impact on the business,” the analysts added.