Davy Research

Davy Morning Equity Briefing

Market Comment

Slowest rise in UK population in 13 years as EU migration flows collapse

UK labour market data for June were a mixed bag. Despite a fall in the unemployment rate to a 43-year low of 4%, employment growth slowed to 1% and average earnings growth to 2.4%. Meanwhile, new Office for National Statistics (ONS) estimates indicated that a collapse in net inward migration from EU countries led to the slowest rise in the UK population in 13 years in 2017. We expect today’s CPI inflation rate for July will remain at 2.4%, below the consensus of 2.5%.

IPL Plastics Inc

Near-term cost pressures hit Q2 margins despite impressive volume growth

IPL Plastics (IPLP) listed on the Toronto Stock Exchange at the end of June. Hence its second-quarter results are its first following an important milestone in the group’s evolution. Significant investment in additional capacity gives IPLP the platform for medium-term growth in the fragmented rigid plastics packaging sector. However, as previously signalled, there are near-term headwinds such as freight and input (resin) cost inflation that will dampen current year profitability. Despite this, Q2 adjusted EBITDA was higher year-on-year, helped by a full quarter’s contribution from Macro. Looking ahead, the excellent volume growth in Q2 (12%) offers a glimpse into the group’s growth potential.

Irish economy

Dublin house price inflation eases to single-digit pace

As expected, annual house price inflation eased in June to 12% from 12.4%, albeit prices were still up 1.1% on the month. In Dublin, prices were up 0.2% on the month and annual inflation eased to 9% from 10.9% in May. Nationally, we expect annual inflation to ease further to about 8% by year-end, albeit with inflation stronger outside Dublin where affordability is less stretched.