Must read: inflation data, UK jobs, TUI

UK UNEMPLOYMENT

The UK unemployment rate dropped to 3.8% in the fourth quarter of 2023, down from 4% in the previous quarter and below analysts’ expectations. Job vacancies in November to January hit 932,000, down 26,000 versus the previous three months, falling for the 19th consecutive month. But the Office for National Statistics (ONS) said there are signs this trend may be slowing. There was an increase in lost working days in December due to strike action, mostly in the health sector and a historically high number of people who are long-term sick, perhaps after the pandemic and amid pressures on the NHS.  

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In a sign of slack in the labour market, pay growth slowed from 6.7% in the previous month to 6.2% excluding bonuses in the year to October to December 2023. Including bonuses, the figure dropped from 6.7% to 5.8%, both still strong and above expectations, but below the record growth rates seen in recent months. No doubt the Bank of England will be relieved to see that pay growth is slowing, in terms of its goal to bring inflation back down towards 2%. Focus now turns to the latest UK inflation figures due tomorrow for further clues into when the central bank might start to cut rates.

TUI 

TUI AG (LSE:TUI) reported first-quarter earnings which sharply surpassed analysts’ expectations – operating profit hit 6 million euros, swinging from a loss of 153 million euros year-on-year. Quarterly revenue hit a record high 4.3 billion euros, up 15% versus the previous year. A total of 3.5 million passengers travelled with Tui over the quarter up from 3.3 million last year. And the travel giant is aiming for record operating profit growth of at least 25% this financial year. 

Over the last year, Tui’s share price has been heavily punished, shedding over 30%. Today’s jump in the stock, up around 3%, has helped to reverse some of its year-to-date slide, and could mark the beginning of a more positive period for price action. 

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Despite pressures from the cost-of-living crisis, individuals and families continue to prioritise their trips abroad. Tui has managed to uphold demand even while simultaneously increasing prices, highlighting how the business holds significant pricing power to pass on additional cost pressures to consumers. 

Meanwhile, the London Stock Exchange could be bracing for yet another blow, as Tui prepares to decide on whether to abandon its London listing. The travel operator is just the latest in a slew of businesses considering fleeing the LSE, to list in rival financial hubs instead such as New York or Frankfurt. This comes after a period of weak price action in the UK post-Brexit, resulting in discounted valuations for UK stocks. Just this week shares in ARM Holdings ADR (NASDAQ:ARM) have taken to the skies in New York, a painful reminder of that nasty blow to London’s public markets.