Data from the Office for National Statistics showed that wages excluding bonuses rose by 5.7 per cent in the three months to May, in line with forecasts and down from 6 per cent previously.
The Bank of England is keeping a close eye on wage growth as it considers the timing of its first interest rate cut.
Economists say the BoE may delay its first rate cut until September as wage growth remains well above consumer price inflation of 2 percent.
The FTSE 100 opens at 8am. Among the companies with reports and trading updates today are International Distribution Services, Frasers, AJ Bell, Dunelm, Evoke and Premier Foods. Read the Business Live blog from Thursday 18 July below.
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Frasers profits rise
Frasers’ profits rose 13.1 percent in the year to April 28. The Sports Direct owner expects growth to accelerate further in the new financial year as it benefits from a plan to move the group upmarket.
Frasers, listed on the FTSE 100 and controlled by founder Mike Ashley, is pursuing what it calls an “elevation strategy” with investments in flagship stores and online operations, and strengthening ties with brands including Nike, Adidas and The North Face. Shares are up 10 percent on the year.
The Group’s brands also include House of Fraser, Flannels, USC and Jack Wills. The Group also has strategic equity interests in a number of other retailers including Hugo Boss, ASOS, Boohoo, Currys and AO World.
Frasers posted an annual adjusted pre-tax profit of £544.8m, at the top end of its guidance of £500m to £55m and up from the £478m it made in 2022/23.
“Our successful Elevation strategy is the driving force behind our strong financial performance, with strategic brand relationships giving us greater access to products across the Frasers Group,” the company said.
The company forecast profits of £575m to £625m for the new financial year, a year that includes Euro 2024 and the Paris Olympics.
“We are confident that our strategy will lead to continued strong performance and we expect significant synergies from both our automation program and the integration of acquisitions,” Frasers added.
Pound hits $1.30 for first time in a year as inflation dampens rate cut hopes
The pound rose above $1.30 for the first time in a year yesterday as higher-than-expected inflation figures dashed hopes of rate cuts.
And against the euro, the rate rose to above €1.19, its highest level in almost two years, providing a boost to British holidaymakers.
Elsewhere, markets were captivated by interest rate developments across the Atlantic, while hopes for a cut by the US Federal Reserve increased.
As a result, the gold price has risen to $2,483 per ounce, a new record.
‘No nasty surprises for Bank of England in today’s labour market report’
Luke Bartholomew, Deputy Chief Economist at Abrdn:
‘There were no nasty surprises from the Bank of England in today’s labour market report: wage growth continues to slow, in line with expectations.
‘Household spending is expected to continue to be supported by wage growth well above inflation.
‘But the flip side of this sword is that wage growth is still well above a level that the Bank would consider consistent with its 2% inflation target. Policymakers must therefore be confident that wage growth will slow further before they cut rates.
‘Given the recent mixed data, if the BoE is indeed planning to cut in August – which we still expect – then the market could benefit from some guidance in that direction from key decision-makers at the bank in the near term.’
Timing of first rate cut ‘closely balanced’
Hetal Mehta, head of economic research at St. James’s Place:
‘No major surprises in today’s labor market figures, the tight labor market was relatively stable.
‘The Bank of England will welcome the slight decline in wage growth, following disappointing service sector inflation yesterday.
‘There are still some important data to be released before the August monetary policy report, but the decision is very balanced.’
Wage growth slows to 5.7%
Data from the Office for National Statistics showed that wages excluding bonuses rose by 5.7 per cent in the three months to May, in line with forecasts and down from 6 per cent the company had reported at the time.
Wage growth has been closely watched by the Bank of England, which is considering the timing of its first rate cut. Economists say the BoE may now delay the first cut until September, as wage growth is still well above consumer price inflation of 2 percent.
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