BUSINESS LIVE: Wages up 7.8%; Rolls-Royce slashes headcount; SJP charging model shake-up

Just before close, the FTSE 100 was up 0.63% to 7,679.06.

Meanwhile, the FTSE 250 was 0.84% higher at 17,667.37.

Ryan Brandham, Head of Global Capital Markets, North America, at Validus Risk Management, comments on the latest US retail sales figures:

The US consumer remains very resilient in the face of accumulated rate hikes to date. This will reinforce the upward momentum in US rates and increase the probability that the Fed needs to do more and hike again before the end of 2023.

If the consumer remains strong, labour markets remain tight, and inflation remains on an upward trajectory, the case will build for more rate hikes this year.

Bellway has warned it could build almost a third fewer properties this financial year amid an ongoing slowdown in the housing sector

The Newcastle-based company is aiming to complete around 7,500 homes for the 12 months ending July 2024, compared to 10,956 in the previous year, due to a much lower reservation rate and order book.

The ex-employees of a Wilko distribution centre which employed 1,200 workers have expressed concerns over their future after the high street giant collapsed.

(PA) – KPMG has launched a fresh round of job cuts in its UK business amid a slowdown in dealmaking in the City.

The financial services and auditing giant said it will reduce roles and freeze pay in its deal advisory business.

It is understood the move, which was first reported by the Financial Times, will affect about 110 people, or almost 7% of the company’s nearly 1,700-strong UK deal advisory division.

Last month, KMPG launched a separate consultation process over plans to axe up to 125 jobs in its consulting business.

Earlier this year it had also warned that its bonus pool for employees was likely to fall this year compared with the previous year.

A KPMG UK spokeswoman said: “A challenging economic environment has driven a softening in a number of markets, including the deals market.

“These conditions have impacted demand in certain areas, as some clients have chosen to pause or delay projects.

“We have therefore taken the difficult decision to put forward proposals to reduce our headcount in a small number of areas of our business.

“Our people are at the heart of our firm and our priority is to support them throughout this consultation.”

The crash in early trading on the New York Stock Exchange wiped about £600million off United’s market value as investors reacted with alarm to the dramatic turn of events at Old Trafford over the weekend.

Outsourcing giant Serco been handed a £350million contract by the Department for Work and Pensions (DWP) to support the assessment of disability benefit claimants.

The five-year contract to deliver functional assessment services (FAS) in the south-west of England is scheduled to start in September 2024, subject to workload volumes.

(PA) – Revolution Bars said the late-night hospitality industry is facing “very challenging” times as it swung to a yearly loss and revealed a drop in sales.

The group, which runs Revolution, Revolucion de Cuba and Peach Pubs, said young people were facing a cost-of-living squeeze and visitor numbers were being affected by train strikes.

It told investors its total revenues were up by £11.8million to £152.6million in the year to the end of July compared to the previous year, after taking over Peach Pubs – a chain of 21 gastropubs focussed in UK market towns – last October.

But like-for-like sales, which strips out new venues that were not trading as part of the company a year ago, were down by 8.7%.

The group said it swung to a statutory pre-tax loss for the year of £22.2million, having made a profit of £2.1million a year ago.

Chief executive Rob Pitcher said there had been a “seismic shift” after the Covid pandemic, with the cost-of-living crisis now being the most significant factor impacting the hospitality sector.

Young people, who are the key demographic for its Revolution bars, have been the most impacted by high inflation, which has reduced the value of their wages, he said.

The budget squeeze has “directly impacted their ability to spend on discretionary items such as nights out”.

Beer giant Brewdog has announced a partnership with Tesco Clubcard, allowing shoppers to use points for pints in its bars across Britain.

The Scottish brewery joins Chef and Brewer and Hungry Horse pubs in offering Clubcard members deals, but Brewdog is the only one to offer pints in exchange for points.

Sports Direct owner Frasers Group will acquire one of the leading sports retailers in Germany, marking the latest expansion in the reach of Mike Ashley’s retail empire.

The Flannels and House of Fraser owner told investors the acquisition of SportScheck will allow it to ‘grow its presence in Germany, one of the biggest sports markets in Europe’.

A cryptocurrency issuer has frozen a number of accounts linked to terrorism.

Tether – which controls stablecoin, a digital currency designed to have a consistent value of $1 to avoid the wild price swings of other cryptocurrencies such as bitcoin – yesterday it said it had frozen accounts worth £718,305 due to what it said were links to terrorism in Israel and Ukraine.

The owner of some of London’s trendiest restaurants has been sold to private investors.

D&D London – which owns Bluebird Chelsea and Coq d’Argent – has agreed a deal with UK-based investment groups Calveton and Breal Capital, that values it at around £60m including debt.

Investors have been rattled in recent weeks by a bond market sell-off that has seen prices plummet, creating opportunities for new buyers but leaving others sitting on losses.

Collapsing demand for government debt is being driven by worry that interest rates will have to stay higher for longer to combat inflation.

The Bank of England must not ‘declare victory prematurely’ in the fight against inflation, a top official has warned.

Huw Pill, the central bank’s chief economist, said there is still ‘some work to do’ to put a lid on rising prices.

St James’s Place has scrapped exit fees for new bond and pension investments in a revamp of its charging structure after facing scrutiny from regulators.

Britain’s largest wealth manager has long faced accusations of excessive fees to customers for financial advice and early withdrawals.

London-listed stocks are trading slightly higher this morning despite a sell-off in mining stocks as prices of most metals slips on concerns around the Middle East war.

Industrial metal miners are down 0.8 per cent, while precious metal miners have lost 0.3 per cent as the US dollar and Treasury yields fird ahead of economic data and Federal Reserve Chair Jerome Powell’s speech this week.

US retail sales and industrial production data is scheduled to come later in the day, while Powell’s upcoming speech on Thursday could offer more clarity on the US central bank’s rate stance.

Shares of gambling company 888 Holdings are down 1.5 per cnet on news the Government is considering a new levy on online gambling companies of up to 1 per cent to fund research, prevention and treatment of gambling addiction.

Bellway has tumbled 3.3 per cent after the homebuilder reported a slump in its annual profit and warned to build 31 per cent fewer homes in 2024, as high mortgage rates took a toll on demand. The homebuilders index is down 1.6 per cent.

Frasers Group – which is controlled by Mike Ashley – has raised its stakes in Boohoo and Asos.

The company, whose brands include Sports Direct, House of Fraser and Flannels, increased its shareholding in fast fashion retailer Boohoo from 13.4 per cent to 15.1 per cent.

Cornish Tin has been granted permission by the King to search for gold and silver as part of a revival of Cornwall’s mining industry.

The company said the Crown Estate, the monarchy’s land holdings portfolio, has granted it exclusive exploration rights to search for the precious metals across 123,447 acres – or 14 per cent – of Cornwall for six years.

Bellway profits sank 18 per cent this financial year as high mortgage rates battered demand, with the homebuilder warning it will build far fewer homes in the 12 months ahead.

Britain’s housing market has been battling a slowdown for most of this year as high mortgage rates dampen demand and weigh on construction activity at a time consumers have tightened their spending in response to a prolonged cost-of-living squeeze.

Weekly bookings in the first nine weeks of the new fiscal year were 133 units, down more than 30 per cent year-on-year, the company said.

The Newcastle-based firm said it was targeting to build around 7,500 homes in the 2024 fiscal year, compared with 10,945 units constructed the year earlier.

‘Since the start of the new financial year, customer demand continues to be affected by mortgage affordability constraints, with reservations below the comparative rates in the prior year,’ Bellway said in a statement.

Brits were offered some much-needed relief today as official figures showed that wages are finally growing faster than inflation for the first time in almost two years, suggesting the cost of living crisis may be starting to ease.

Average regular earnings increased 7.8 per cent in the three months to August and lifted 0.7 per cent after taking Consumer Prices Index inflation into account, according to the Office for National Statistics.

This is the first time pay has overtaken price increases since October 2021, during the Covid-19 pandemic.

Richard Carter, head of fixed interest research at Quilter Cheviot:

‘Despite the current pause in rate rises, businesses will still be finding the going very tough. As a result of higher interest rates it may lead to a plateauing of wage growth, given that businesses will not have the surplus funds to sanction significant salary increases.

‘Furthermore, with the continued financial uncertainty, employees might tread cautiously when it comes to negotiating for pay hikes for fear of becoming too expensive to keep on.

‘Similarly, businesses could opt to stay lean and not take on too many more staff with future economic uncertainty still prevalent reducing the number of roles available.

‘Therefore, despite the positive momentum in wages over the past year, a deceleration seems likely in the near future.

‘All eyes will be on next week’s data and not only will the unemployment rate be closely watched, but it is also hoped that the percentage of those economically inactive will have seen a further reduction.

‘If this is the case, it would come as a real positive for the government as it continues to try and help encourage people back to work. However, in light of the cost-of-living crisis, this may end up happening naturally in the coming months as belts have to tighten.’

Emma Mogford, fund manager of the Premier Miton Monthly Income fund:

‘With the number of employees on payroll falling and wage inflation below expectations, this gives the Bank of England more reason to pause its interest rate increases.

‘If we are at peak rates, then a more stable outlook for interest rates could help the economy and stock market.’

St. James’s Place has confirmed planned changes to its fee structure aimed at reducing overall ongoing charges for existing client investments across core products.

Britain’s largest wealth manager has been under pressure from regulators to overhaul the way it charges clients to comply with UK’s new Consumer Duty rules, which has weighed on the FTSE 100 firm’s shares.

Last week, it had said it was working with regulators and evaluating options in response to the rules set out by the country’s finance watchdog, which seeks to draw a line under retail mis-selling scandals going back to the 1980s, from endowment mortgages to pensions and payment protection insurance.

The changes to fees, which will come into effect during the second half of 2025, will see an initial charge and ongoing charges applicable from the outset, and without any early withdrawal charges for the vast majority of new investment bonds and pensions, St. James’s Place said in a statement.

Rolls-Royce will cut up to 2,500 roles as part of its new chief executive’s plan to build a more efficient business in a wider turnaround strategy.

Rolls-Royce, whose engines and systems are used on the Airbus A350 and Boeing 787 as well as ships, submarines and in power generation, has been through multiple restructurings over the last decade, including one in 2020 aimed at surviving the pandemic which resulted in 9,000 job cuts.

Tufan Erginbilgic, chief executive, said:

‘We are building a Rolls-Royce that is fit for the future. That means a more streamlined and efficient organisation that will deliver for our customers, partners and shareholders.

‘Our business is full of committed, talented people and I believe these changes will enable them to build greater capability in areas that are key to our long-term success.

‘This is another step on our multi-year transformation journey to build a high performing, competitive, resilient and growing Rolls-Royce.’

UK workers’ wages before bonuses were 7.8 per cent higher year-on-year in the three months to the end of August, in-line with expectations, as pay growth finally begins to slow from record highs in the previous quarter.