YP75: Market escapes the freeze as US jobs strike a positive note

Neither heavy snowfall across much of the UK, nor significantly worse than expected December job figures from the US, could put a freeze on the UK market last week as the FTSE 100 closed 2.2 per cent higher at 5534.
By The Newsroom
Published 12th Jan 2010, 11:42 BST
Updated 12th Jan 2010, 11:42 BST

US Non-Farm Payrolls, which were widely tipped to show employment growth in December, actually posted a loss of 85,000.

Better news however came from the revised November figures which were upgraded to a 4,000 increase in employment, the first positive month for jobs since December 2007.

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Here in the UK, the Monetary Policy Committee kept interest rates on hold for a record tenth month last week as well as maintaining the existing 200bn Quantitative Easing programme. Meanwhile, the UK Producer Prices index rose by 0.5 per cent in December, a 3.5 per cent increase on a year earlier, raising speculation that inflation may pick up at a greater pace through 2010 than previously predicted by the Bank of England.

The UK's largest housebuilder, Persimmon, reported a 40 per cent increase in forward sales for 2010 compared to a year earlier, as it restated confidence in the long-term prospects for the UK housing market.

The group did, however, warn against overly optimistic forecasts for the normally strong spring selling season, despite improving mortgage availability. During 2009, the company completed just short of 9,000 new home sales earning the group about 1.4bn in revenues.

The group is continuing to purchase new land at an average of 50 per cent less than at the peak of the market. Chief executive Mike Farley stated that this discount should lead to improved profit margins going forward as and when Persimmon sells on dwellings built on this newly acquired land. The results were warmly received by the market with one particular analyst lifting a target price to 570p. The shares ended the week at 491p.

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Another local company whose fortunes are tied to the UK housing market is Huddersfield-based Marshalls.

The company provides landscaping products to the public and commercial markets as well as the general public.

According to the group, public sector demand remains at low levels, however there have been some signs of a pick up in housebuilding activity. The group reported a decline in revenue of 17.5 per cent year on year but restated its commitment to keeping costs down, admitting further redundancies could be made if required.

In other news, digital set-top box manufacturer Pace announced it remains on course to meet management expectations for the 2009 financial year, confirming that it had benefited from a record year's trading. While the statement did not offer any expected figures for the year end, analyst expectations point towards pre-tax profit of about 69m. Full year results are expected in early March 2010.