US June non-farm payrolls to arrive a day early ahead of Independence Day long weekend

The big focus on Thursday will be the June US jobs report brought forward by a day because of the Independence Day holiday weekend, meaning it will be announced on the same day as the more timely continuing and initial weekly jobless claims.

May non-farm payrolls (NFP) shocked most in the market by being much better than expected. Economists had been looking for another 7.7mln job losses and a jump in the unemployment rate to nearly 20%, but the May NFP number printed at a positive 2.5mln jobs, which suggested the US economy was rebounding faster than expected from the effects of the pandemic.

However, the Bureau of Labor Statistics then admitted it had made errors in compiling the data and not corrected them.

“This was because the BLS survey interviewers were told to classify workers on furlough or absent from work owing to COVID-19 for temporary reasons as unemployed – but it turns out that not everyone in that situation was, with some still registered as employed,” said Russ Mould, investment director at AJ Bell.

“That caused a real stir, not least because of accusations that the BLS was understating the jobless rate by around three percentage points to make US economy look better than it really is.”

The June NFP number is forecast to be a record 3mln, topping last months record of 2.509mln, but with estimates ranging greatly, from 1mln to 5.755mln. The US unemployment rate is expected to fall back to 12.5%.

ABF sees Primark tills ring once again

On the corporate front, Primark owner Associated British Foods PLC (LON:ABF) is expected to issue a trading update on Thursday, around two and a half weeks after outlets of the cheap clothing chain reopened for business amid a relaxation of UK lockdown restrictions.

Investors will be keen to hear about initial trading as hordes of UK consumers queued up for the companys products, as well as how badly the closures during lockdown have the companys bottom line.

Analysts at Jefferies said recent newsflow has “provided plenty of evidence that shoppers, facing a depressed economic environment but eager to escape the confines of the last 3 months, are prioritising price as retail unlocks. A situation which has put Primark front and centre of consumers minds”.

As a result, the broker said estimates now reflected “a faster emergence from hibernation than initially expected”.

In its interim results in April, the company said it had “ample cash” to deal with any impact from the pandemic, shareholders will likely be looking for just how much it has cost, as well as any plans by the company to revisit its dividend policy after cancelling the payout during the apex of the outbreak.

Meggitt spins out trading update

Meggitt PLC (LON:MGGT) will also provide a trading update on Thursday, with the aerospace engineer now back as a FTSE 250 company again, with its relegation from the blue chip index confirmed last month as its shares have halved since the start of the year back to roughly where they were 13 years ago.

Despite being part of the consortium of engineering and manufacturing companies working on ventilators to help the NHS shortage amid the coronavirus pandemic, its civil aerospace business has been hit by a sharp drop in demand.

In a first-quarter update in April, the group said it had cut 1,500 jobs, around 15% of its global workforce, implemented a hiring freeze and a 20% pay cut for its executive directors, to reduce cash expenditure levels by around £400-450mln this year.

The full gory details will be revealed of how hard the business had been hit, as the last we heard then was that it was “too early to provide forward looking guidance at the current time” in light of a “highly fluid market and global macro-economic situation”.

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