Friday preview: US February jobs report, SIG in focus

The US jobs market will hog the spotlight at the end of the week, barring surprises out of the US-China trade talks or around Brexit.

Consensus is calling for a slowdown in non-farm payrolls growth Stateside to 185,000 in February after a bumper reading of 304,000 for January, alongside a slight acceleration in the year-on-year pace of growth in average hourly earnings to 3.3%.

But not everyone is on board with that forecast, with Pantheon Macroeconomics's Ian Shepherdson anticipating a reading of 125,000.

"We think the Jan official number was elevated by favorable weather effects and double-counting of federal government workers taking second jobs during the shutdown," he told clients in a research note sent two days before.

Nevertheless, he did go on to add that: "Looking ahead, the trend in labor demand appears consistent with payroll growth in the high 100s."

Also due out on Friday are the latest readings on Chinese exports and imports for February.

In the UK meanwhile, investors will be perusing the latest REC staff placements and salary surveys for February, alongside BDO's High Street Sales Tracker referencing that same month, which were due to be released overnight

Across the Channel, investors' focus will be on German factory orders data for last month, alongside readings on French, Spanish and Italian industrial production covering the month of January.

Despite the recent improvement in sentiment towards homebuilders on the back of hopes that a 'no deal' Brexit will be avoided, Numis analyst Howard Seymour was concerned that might not apply to the UK commercial office space and hence to SIG.

In a research note sent to clients, Seymour said that the weaker macro backdrop in Britain might offset management actions at an outfit "where recovery potential is the key investment thesis".

"There remains downside risks to earnings which will be manifest in ongoing share price underperformance."

Indeed, the consensus forecast was for a decline in the insulation and roofing supplier's full-year profits before tax from £79.2m to £74.3m.

For Bodycote meanwhile, Numis was at £137.5m for the heat treatments and coatings specialist's full-year profits before tax, versus £121.5m in 2017 on the back of the recovery seen in the energy patch, alongside a stronger showing for its aerospace arm thanks to the resolution of customer supply chain issues.

However, while the businesses' operational gearing was a 'psoitive', its cyclicality might not "given the greater uncertainty in end markets."

"With acquisitions proving difficult, management need to demonstrate that they can drive growth in the higher margin specialist businesses," analyst David Larkam said.

Intriguingly, if the past was any guide, Larkam pointed out that the company's net cash position appeared on track to match last year's level, ergo, a similar special dividend might follow, suggesting a dividend yield of 5%.

On the flip side, there was the "less certain outlook" in automotive and general industrial in Europe to contend with.

"We like the cash generation, but need to see real growth, rather than market recovery growth, including additive manufacturing if this really is a significant opportunity."

Friday March 08

INTERIM DIVIDEND PAYMENT DATE

Daejan Holdings, Henderson Smaller Companies Inv Trust

QUARTERLY EX-DIVIDEND DATE

General Electric Co

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Non-Farm Payrolls (US) (13:30)

Unemployment Rate (US) (13:30)

Wholesales Inventories (US) (15:00)

FINALS

SIG

ANNUAL REPORT

CRH

AGMS

Geiger Counter Limited, PCF Group

UK ECONOMIC ANNOUNCEMENTS

Industrial Production (09:30)

FINAL DIVIDEND PAYMENT DATE

Baronsmead Second Venture Trust, Baronsmead Venture Trust, Elegant Hotels Group , Renew Holdings