It’s been a good year for the plastic packaging group with the shares comfortably outperforming the market. So much so that at the time of writing, it is now expected to join the blue-chip FTSE 100 index in the next reshuffle in December. Full-year figures in June beat market expectations and in October the company said volume growth had remained consistently strong across all regions. All of this, along with a broker upgrade, has raised expectations which may be hard to beat. There will also be interest in how the recently acquired US company Interstate Resources is performing.
Berkeley Group (Q2 Results)
Berkeley, like most of its housebuilding peers, has done well since the EU referendum with home sales and prices holding up relatively well, as last updated to the market in September. However, management did highlight back then the increased risks to the house building sector from the uncertainties created by Brexit and the pressures faced by consumers. The London housing market has been more pressed than the rest of the country and given the group’s premium London focus, it is unlikely to reap the benefits of the changes to stamp duty made in the recent budget.
We currently list Berkeley Group as a HOLD
5 December, Purchasing Managers Index (PMI), tracking services, completing the full set of PMIs for November – Markit/Chartered Institute of Procurement & Supply
While the news on the UK economy has not been so good of late, the PMIs do point to a pick-up. The PMI for UK manufacturing in October rose modestly to 56.3, the PMI for construction rose from 48.1 to 50.8, although optimism fell to a near five-year low, and the Business Activity Index tracking services rose to 55.6, from 53.6. Any reading over 50, points to expansion. Collectively the three indexes were consistent with a quarterly growth rate of 0.5%. If this proves right, it will be one of the best monthly performances of the year. Did we see a continuation of the encouraging data in November?
8 December, US Employment Situation – U.S. Bureau of Labor Statistics
In October, US non-farm payrolls increased by 261,000, which, was actually less than expected. But data for the two previous months was revised up, so in total, the jobs figures were quite good. Unemployment fell to just 4.1%, a 17 year-low. There will come a point when there is insufficient slack in the labour market for non-farm payrolls to rise any further. Indeed, US unemployment is already below the level the FED had previously considered to be the equilibrium level. But the purchasing managers’ indexes point to continued growth, November may well have been another month for significant growth in non-farm payrolls, and maybe US unemployment will fall to the psychologically significant 4.0%, if not in November, then soon.
Further announcements include:
• UK Purchasing managers index for construction, November – Markit/Chartered Institute of Procurement & Supply
• The UK national balance sheet: 2017 estimates – Office for National Statistics
• Record of the FPC Meeting held on 22 November 2017 – Bank of England
• Purchasing managers indexes covering services and composite for various regions world-wide, including US, Euro area, and China – Markit/ISM (US) and Caixin (China)
• EU GDP and main aggregates, Q3 2017 – Eurostat
• UK index of production: October 2017 – Office for National Statistics
• Construction output in Great Britain: October 2017 and new orders July to September 2017 – Office for National Statistics
• UK trade: October 2017 – Office for National Statistics
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