FTSE has rollercoaster day as UK unemployment rate falls to 4.3%

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 European markets subdued as UK unemployment rate falls to 4.3%
The ONS said that total job-to-job moves came in at a record 979,000 during the quarter, 'largely driven by resignations rather than dismissals'. Photo: Dominic Lipinski/PA Images via Getty

European stock markets were mixed on Tuesday as the UK jobless rate tumbled to 4.3%, and company payrolls rose again.

In London, a rise in retail and telecoms stock failed to push the FTSE 100 (^FTSE) higher. The FTSE had a rollercoaster day, ending 0.3% lower after a muted start.

The French CAC (^FCHI) climbed 0.3% and the DAX (^GDAXI) was 0.6% higher in Germany. 

It came as British employers added 160,000 workers to their payrolls in October, according to official figures. It marked the first month after the end of the government's furlough scheme, which ran from March 2020 to September 2021

The unemployment rate in the UK for July to September fell to 4.3%, down by 0.5% compared to a year earlier, the Office for National Statistics (ONS) said.

The ONS added that total job-to-job moves came in at a record 979,000 during the quarter, "largely driven by resignations rather than dismissals".

Chancellor Rishi Sunak said: “Today’s numbers are testament to the extraordinary success of the furlough scheme and welcome evidence that our Plan for Jobs has worked.

“We know how vital keeping people in good jobs is, both for them and for our economy — which is why it’s fantastic to see the unemployment rate falling for 9 months in a row and record numbers of people moving into employment.”

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The pound rose against the dollar (GBPUSD=X) on the day as stronger than expected unemployment figures suggested Bank of England governor Andrew Bailey might deliver the promised rate rise in December. 

Traders will have all eyes now firmly fixed on the inflation report on Wednesday, with CPI numbers set to move up towards 4% and even beyond.

Victoria Scholar, head of investment at Interactive Investor said: "The central bank governor Andrew Bailey sounded his concerns just yesterday about the tightness of the labour market, which today’s data largely appears to confirm, increasing the chances of a rate hike sooner rather than later.

"The pound enjoyed a boost, thanks to the headline unemployment figure, pushing back above $1.346 and going against the downtrend that has been in play since its peak in June."

Across the pond, the S&P 500 (^GSPC) rose 0.5% by the time of the European close and the tech-heavy Nasdaq (^IXIC) was also 0.5% higher. The Dow Jones (^DJI) climbed 0.5% too.

It came as new data showed US retail sales surged in October. Retail sales rose 1.7% last month, building on a 0.8% increase in September, and marking the third consecutive month of gains. Compared to last October, sales were up a huge 16.3%.

Spending at electronics & appliance stores rose by 3.8% during the month, while motor vehicles and parts spending rose 1.8%, and spending at department stores climbed by 2.2%.

Americans also spent more on gasoline, due to the surge in prices at the pumps.

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On Monday, US markets, which opened in positive territory, soon gave up their gains during the session, as US bond yields pushed higher, with the 10-year closing above 1.6%, closing little changed on the day.

Away from equity markets the US dollar continued to gain, hitting new 15-month highs against a basket of currencies.

Elsewhere, stocks were mixed in Asia, with traders turning their attention to virtual talks taking place between US president Joe Biden and Chinese president Xi Jinping.

The Nikkei (^N225) climbed 0.1% in Japan, while the Shanghai Composite (000001.SS) fell 0.3%. In Hong Kong, the Hang Seng (^HSI) gained 1.3% as tech firms built on a recent advance as concerns about China's recent crackdown on the sector eased.

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