UK unemployment rate, retail sales' effect on FTSE 250, FTSE 100, GBP

Video Transcript

Unemployment rate at lowest level in decades

There has been a sharp rise in the number of people in the UK dropping out of the jobs market, which the Office for National Statistics (ONS) says has artificially pushed the UK unemployment rate down to its lowest level since the mid 1970s.

The unemployment rate is down to 3.5% in August from 3.6% the previous month. But the claimant count, which is for September, rose by 25,000. Estimates had been for 10,000. The prior reading was 6 300 so that is the first rise we've seen since February 2021.

Now the volume of people in the UK not looking for work climbed around 330,000 over the last three months, according to the ONS. That rise in what economists call people who are economically inactive forced the UK unemployment rate down to that 3.5%.

Retail sales

Meanwhile, retail sales in the United Kingdom increased by 1.8% on a like-for-like basis in September, hitting a 7-month high due to higher prices. Total retail sales rose by 2.2%. Sales volume though remained low as consumers continue to grapple with the cost of living crisis. As consumer confidence declines, people are avoiding large ticket items and are preparing for higher energy costs this winter.

FTSE 250 chart

Let's take a look at what this is doing to the FTSE 250 index, first of all, which is on the way down and we recently saw it drop 31.5% from the record highs we saw back in September 2021.

And indeed in the last few days it's been down again not too far away from this line of support at 16738, which was what we broke the other day, which was the low we established back in the 22nd of September.

FTSE 100

Bearing in mind that 31.5% slump the FTSE 100 from its high point to its low point was down 12%, we haven't yet breached that. So the FTSE 100 is holding up. Why?

Well in part due to the sinking sterling, sterling has been down, which means that exports are a lot cheaper to find in terms of the overall export market. And when you find the markets, it's a lot more advantageous bringing foreign currency back to the UK.

GBP/EUR

Anyway, what the Bank of England in the market at the moment supporting sterling just over the 110 level at one 11097. I'd be reluctant to put a short trade on this unless I saw a candle close below the 110 level.

Just quickly updating this on what's happening with GBP/EUR. Same sort of price action. We're going sideways at the moment at 11405.