FTSE 100: 6,609.93 +11.75 (0.18%)
7th straight gain on good output figures
Productivity rose 0.6% in the third quarter, according to official government figures compared with the previous three months. It was the first quarterly increase since April-June last year and the biggest rise in more than three years.
It is still 2% below its level prior to the economic downturn in 2008, but there are hopes that it will continue rising next year. The figures alleviate the need for interest rate rises which may remain at their historic low for another 12 months and certainly not until inflationary pressures re-emerge.
The news was more positive than figures yesterday showing the economy growing at a slower pace than first thought.
The Office for National Statistics (ONS) surprisingly revised down its UK gross domestic product (GDP) growth estimates for the last five quarters.
While growth of 0.7% in the third quarter (Q3) was confirmed and unrevised from the initial estimate published last month, ONS said GDP in volume terms between Q3 2013 and Q3 2014 increased by 2.6%, compared with the initial estimate of 3%.
The lower rate of growth is likely to prompt a round of other revisions by forecasters.
US jobless claims figures for last week are due later and are expected to have risen just 1,000 to 290,000 in the week ended 20 December.
Shares in Smith & Nephew topped the riser board on rumours that US surgical implants group Stryker Corp could launch a takeover offer within weeks. Bloomberg said Stryker is looking to make a bid at a premium of around 30% to S&N’s current share price which values the company around £10bn.
Thorntons fell a further 3% after it warned on weak supermarket orders.