A Look at Restaurant Group and Mitchells And Butlers as UK Unemployment Rate Fall

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A Look at Restaurant Group and Mitchells And Butlers as UK Unemployment Rate Fall

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 A Look at Restaurant Group and Mitchells And Butlers as UK Unemployment Rate Fall
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Summary

  • The Office for National Statistics announced today the UK’s unemployment rate beat estimates between January and March to 4.8 per cent, from an estimated 4.9 per cent.
  • Hiring also rose from by 97,000 during March to April, indicating signs of recovery.
  • The rise was due to easing of lockdown restrictions from April for non-essential sectors, mainly in the hospitality and travel and leisure sectors.

The Office for National Statistics (ONS) reported on Tuesday that the UK’s unemployment rate fell again between January and March despite remaining under strict lockdown restrictions. The rate fell to 4.8 per cent for the period from 5.1 per cent seen in Q4 2020, beating expectations of holding steady at 4.9 per cent.

The number of employed people rose to 84,000 in Q1 2021. Meanwhile, the number of unemployed people fell by 121,000, indicating the labour market was not that badly affected by the lockdown as previously thought.

Additionally, the number of employees on national payrolls by 97,000 during the months of March and April, making it the biggest monthly hike in almost six-year, driven largely due to easing of restrictions. Meanwhile, the FTSE 100 index gained 0.33 per cent to 7,056.23 on 18 May as of 10:03 HRS GMT+1 buoyed by the news.

The hiring spree was primarily induced by the non-essential sector, when outdoor venues and leisure facilities reopened from 12 April, with growth particularly seen in the accommodation and food service sectors. Further easing of restrictions were allowed from 17 May for indoor dining, while the next round of restrictions that are set to be lifted is due on 21 June.

Also Read: How British equities performed after an increase in the unemployment rate to 5.1%? | UK Market Update

Here we take a look at two stocks from the hospitality sector and see how they have reacted to the development:

  1. Restaurant Group PLC (LON: RTN)

The FTSE 250 listed company Restaurant Group is also the owner of the popular restaurant chain Wagamama. The group posted revenues of £459.77 million in FY 2020, lower as compared to £1.073 billion in FY 2019. It had also reported a higher pre-tax loss of £127.59 for the year, compared to a pre-tax loss of £37.29 in FY 2019.

(Source: Refinitiv, Thomson Reuters)

The company’s stock price was at GBX 120.20, higher by 0.17 per cent as of 18 May at 10:36 HRS GMT+1. While the broader index FTSE 250 stood at 22,316.47, up by 0.46 per cent for the same period. The company’s year to date gains stood at 89.32 per cent.

  1. Mitchells and Butlers PLC (LON: MAB)

The FTSE 250 listed Mitchells and Butlers is a pub, bars and restaurant business. The company reported its FY2020 revenues at £1.475 billion and a pre-tax loss of £123 million compared to revenues of £2.237 billion and a pre-tax profit of £177 million in FY 2019.

(Source: Refinitiv, Thomson Reuters)

The company’s stock rose by 0.39 per cent to GBX 309.00 as of 18 May at 10:35 HRS GMT+1. While the travel and leisure sectoral index rose by 0.61 per cent to 8,400.05. The company’s year to date gains stood at 42.22 per cent.

Also Read: What led Mitchells & Butlers to raise equity capital amid third nationwide lockdown?

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