Closing summary
Mortgage approvals in the UK picked up in November, adding to other signs of a revival in the housing market, while consumer lending via credit cards and personal loan hit a near-seven year high in November and credit card borrowing doubled to £1bn, according to the Bank of England.
Next has upgraded profit hopes for the year after ringing up £38m more in sales than expected in the run-up to Christmas, but warned that difficulties in the Red Sea could delay deliveries and hit sales in the year ahead.
The fashion and homeware chain said full-price sales had stepped up dramatically, rising by 10%, in the last two weeks before Christmas. As a result, sales rose by 5.7% in the nine weeks to 30 December, far better than the 2% expected.
It is the fifth time in seven months that Next has increased its profit forecast. Its shares hit an all-time high of £85.32.
More than £1.8bn was wiped off the value of JD Sports today after the fashion retailer issued a profit warning saying that mild weather, rising costs and heavy discounting had affected sales before Christmas.
Shares in the retail group, which owns Go Outdoors, Blacks, Millets and Size? as well as the JD chain, dived by more than 23% to 119p, their lowest in a year, making it the biggest faller in the FTSE 100, after the company said it did not expect to make more than £935m in annual profits, 10% below its previous guidance.
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Updated
The US service sector enjoyed faster growth at the end of 2023, as new orders rose at the sharpest rate since June and business confidence and hiring improved, according to a survey.
The final reading for the US services business activity index from S&P Global rose to 51.4 in December from 40.8 in November, up slightly from the flash estimate of 51.3. Output increased at the fastest rate since July.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said:
Some New Year cheer is provided by the PMI signalling an acceleration of growth in the vast services economy, which reported its largest rise in output for five months in December. The improvement overshadows a downturn recorded in manufacturing to indicate that the overall pace of US economic growth likely accelerated slightly at the end of the year.
Some support to financial services in particular is coming from the recent loosening of financial conditions amid growing hopes of interest rate cuts in 2024. Growth nevertheless remains subdued by standards seen over the spring and summer, with the struggling manufacturing sector dampening demand for businessto-business services and consumers remaining far less inclined to spend on luxuries such as travel and recreation than earlier in the year.
The more challenging demand environment has dampened firms’ pricing power, squeezing service sector selling price inflation to the lowest for over three years on average during the fourth quarter. With sticky service sector inflation being a key area of concern among Fed policymakers, the slower rate of price increase in December is welcome news.
