Closing post
Time to wrap up.
Here’s the latest on the situation at Port Talbot:
Tata Steel has pulled an announcement that had been expected to detail steep job cuts at its Port Talbot steelworks, in a dramatic last-minute reprieve that has left workers in the dark over the plant’s future.
Workers had been braced for confirmation of the closures of the two blast furnaces after a board meeting on Wednesday. However, Tata communicated after the board meeting that it would not be releasing a statement on its plans.
Unions have been left in the dark over the reasoning and whether Tata is likely to make an announcement or not in the coming days or weeks.
And here’s the rest of today’s business and economics news:
Tata Steel’s latest financial results also show it made a loss, on an EBITDA basis, in the UK of 1,367 crores (or £135m) in July-September.
That’s an increase on the previous quarter, even though raw material costs fell.
Updated
Tata Steel has canceled a press conference where the firm was expected to announce the shuttering of blast furnaces at its UK steel plant alongside thousands of job cuts, Bloomberg reports, adding:
The Indian company was due to hold a press conference after its quarterly earnings report on Wednesday, but canceled it on short notice for “unavoidable reasons,” according to a spokesperson.
People familiar with the matter had said the firm was set to announce the restructuring of its operations at the Port Talbot site in south Wales.
Tata Steel cancels a press conference where the firm was expected to announce the shuttering of blast furnaces at its UK steel plant alongside thousands of job cuts https://t.co/53ARLDVvnS
— Bloomberg Economics (@economics) November 1, 2023
Tata Steel reports net loss
Tata Steel has just released its latest financial results, showing it made a net loss in the last quarter as it made provisions for restructuring costs in the UK.
The steel producer has reported a loss after tax of 6,511 Crores for the July-September quarter, or 65 billion rupees (£644m).
The company says it has “assessed” the potential impact of its plans to restructure in the UK, decarbonising its activities and moving to an EAF (electric arc furnace), adding:
We have taken an impairment charge of Rs 12,560 crores (£1.25bn) in standalone financial statements and Rs 2,746 crores in consolidated financial statements. In addition, we have taken a charge towards restructuring & other provisions of Rs 3,612 crores in consolidated financial statements.
Although Tata’s Indian operations were profitable, it made an EBITDA loss of £242m in Europe.
I can’t see any details of the expected job cuts at Port Talbot in the release, though, following the delay to today’s announcement.
On the Welsh steel plant, Tata says:
In September, Tata Steel announced plans to invest in a state-of-the-art scrap based EAF at Port Talbot, UK at a cost of £1.25bn with a government grant of £500 million, subject to relevant regulatory approvals, information and consultation processes and finalization of detailed terms & conditions.
The transition to EAF based steelmaking will result in reduction of 50 mn tons of direct carbon emissions over a decade
Updated
Mass lawsuit against Apple over iPhone batteries can go ahead, London tribunal rules
Apple has lost a bid to block a mass London lawsuit accusing it of hiding defective batteries in millions of iPhones by “throttling” them with software updates.
Reuters has the details:
The tech giant is facing a lawsuit brought by consumer champion Justin Gutmann on behalf of iPhone users in the United Kingdom, which the Competition Appeal Tribunal (CAT) ruled can proceed.
Gutmann’s lawyers had argued Apple concealed issues with batteries in certain phone models and “surreptitiously” installed a power management tool which limited performance.
Apple, however, said the lawsuit is “baseless” and that it strongly denies batteries in iPhones were defective, apart from in a small number of iPhone 6s models for which it offered free battery replacements.
The CAT ruled Gutmann’s claim should be certified to continue, but that there was “a lack of clarity and specificity” in the case which needed to be resolved before any trial.
Charlotte Brumpton-Childs, GMB national officer, says:
“GMB expects a full and meaningful consultation before any detailed plans are announced.
“We are working at pace with our experts Syndex to analyse the company’s proposal and offer a viable and reasonable alternative that safeguards jobs and creates a genuinely ‘just’ transition.
“This was fed back to the company this morning and remains the position of the unions.”
The Unite union are calling on the government to take a stake in the UK steel industry, to help protect jobs.
Speaking before the announcement expected today was delayed, Unite general secretary Sharon Graham said:
“Unite condemns Tata’s consideration of mass redundancies. We do not accept the need for one single job cut.
“The strategy of successive government’s has failed. Taxpayers should not be footing the bill for new investment unless that is linked to binding job guarantees.
“Tata’s sole purpose is serving its shareholders, not UK steel communities. Only by the government taking a stake in the company, will the right choices be made for the UK’s economy.
“The UK steel industry is at a crossroads and there is a clear political choice. Politicians need to decide now whose side they are on. Unite’s plan for steel would see the UK once again become a world leader in steel, doubling production, safeguarding employment and creating thousands of new jobs.
“Both the government and the Labour party now need to go much further and back the Workers’ Plan for Steel.
Unite is committing significant resource in our fight to save our steel industry.”
Tata Steel jobs cuts announcement pulled at last minute
BREAKING: Tata Steel has pulled an announcement that was expected to detail steep job cuts at its Port Talbot steelworks at the last minute.
Workers had been braced for an announcement following a board meeting on Wednesday, as we reported this morning. However, Tata communicated after the board meeting that it would not be making an announcement today.
Unions have been left in the dark over Tata’s reasoning - and whether Tata is likely to make an announcement or not.
Workers are hoping that the company may be considering alternatives to closure of the blast furnaces that unions put forward. However, any permanent reprieve would come as a major surprise, as Tata executives in Port Talbot had got as far as preparing initial plans for the closure.
Updated
US private payrolls miss expectations in October, says ADP
Over in the US, companies added fewer new workers last month than expected.
US private payrolls rose by 113,000 jobs last month, the latest National Employment Report from ADP showed on Wednesday.
That’s weaker than the 150,000 new jobs which economists had expected, but is an increase on September’s 89,000.
Nela Richardson, chief economist at ADP, explains:
“No single industry dominated hiring this month, and big post-pandemic pay increases seem to be behind us.
“In all, October’s numbers paint a well-rounded jobs picture. And while the labor market has slowed, it’s still enough to support strong consumer spending.”
⚠️BREAKING:
— Investing.com (@Investingcom) November 1, 2023
*U.S. OCTOBER ADP NONFARM PAYROLLS RISE BY 113,000; EST. 150,000; PREV. 89,000
🇺🇸🇺🇸 pic.twitter.com/48T8isPj63
September’s data was unrevised, despite the official US Non-Farm Payroll showing the economy added 336,000 jobs in September.
We get October’s NFP on Friday.
A government aide has told the Financail Times that the recent agreement reached with Tata “secures the long-term future of steel in South Wales”.
Without significant government support, “there was a risk of closing Port Talbot altogether”, said the aide, adding:
“All 8,000 Tata employees could have lost their jobs and an additional 12,500 in the supply chain.”
We’re still awaiting details of the expected announcement of a restructuring of Tata’s UK operations.
Steel unions have warned there could be a ‘major industrial dispute’ over plans to lose thousands of jobs in Port Talbot and close its two remaining blast furnaces.
Roy Rickhuss, general secretary of the Community union, said:
“The unions do not accept the closure of the heavy end and we continue to believe the blast furnaces are crucial to the transition to green steelmaking.
“We will never accept Tata and the Government’s plan to close down our iron and steelmaking facilities and supply our mills with foreign steel for however many years it takes for them to build an electric arc furnace (EAF).
“Closing down our industry to import dirty steels from abroad, giving our jobs and our order book to competitors overseas, is not a green plan and we will oppose it with everything we’ve got.
“Experts at Syndex have been working tirelessly to review the company’s plans and develop potential alternatives, and we are convinced we can both decarbonise steelmaking and deliver a just transition for the workforce.
“We call on Tata to pull back from the brink and commit to working with the unions and our experts to agree the way forward and head off a major industrial dispute.”
We have previously reported on the UK losing ground globally in conducting clinical trials, which are needed to test new medicines on patients.
There is some good news today: London-based ViroCell Biologics is now able to manufacture and export globally viral vectors from a Great Ormond Street Hospital (GOSH) facility, the Zayed Centre for Research, for use in clinical trials. The centre has just been granted a licence to manufacture viral vectors.
Viral vectors are tools designed to deliver genetic material into cells. There has been a shortage of certain viral vectors in the cell and gene therapy market where they are used to genetically modify human cells to create new treatments.
ViroCell said it should be able to relieve the strain on clinical research caused by the vector shortage.
Claire Booth, Mahboubian Professor in gene therapy and paediatric immunology at GOSH, and clinical academic lead for the cell & gene therapy service at GOSH, said:
“With our state-of-the-art facility and ViroCell’s international network of collaborators, vectors for both UK and global projects can be manufactured at the Zayed Centre for Research, unclogging the industry-wide bottleneck, accelerating cell and gene therapy clinical trials and expanding the novel treatments that we can offer to our patients.”
Here are two charts from Nationwide, showing how house prices picked up in October but were still lower than a year ago:
And here’s our news story on the data:
Tata’s UK operations have struggled for years to turn a profit in the brutally low margin steelmaking industry, points out Bloomberg, adding:
Mills across the continent have faced low demand for the metal due to the economic slowdown, as well as competition from Asian imports.
Cosmetics company Estée Lauder has cut its forecast for sales this financial year, blaming China’s weak economy and rising geopolitical risks in the Middle East.
In its first-quarter results, just released, Estée Lauder says it hit expectations in the last three months, but is lowering its full-year outlook to reflect “incremental external headwinds”
This reflects the slower pace of recovery in net sales and margins, the company says, adding;
In mainland China, the expected growth rate of overall prestige beauty has slowed. To reflect this trend, the Company is lowering its fiscal 2024 expectations for mainland China and Asia travel retail.
Amid this headwind, the Company continues to expect to reset retailer inventory in Asia travel retail by the end of the third quarter of fiscal 2024. This, combined with the potential risks of further business disruptions in Israel and other parts of the Middle East as well as currency headwinds, are increasing the pressure on the Company’s fiscal 2024 financial results.
Shares in Estée Lauder are down 14% in pre-market trading.
yikes ..$EL 🇺🇸 Estée Lauder https://t.co/zDelsXM6u6 pic.twitter.com/xQ4RHxjrF6
— John T. Bresnahan (@john_bresnahan) November 1, 2023
Full story; Port Talbot steelworkers braced for up to 3,000 job cuts
The looming job cuts at Port Talbot come less than two months after the UK government said it would give Tata £500m in subsidies to help it upgrade the steelworks.
That money, though, will not cover the cost of installing a plant to make zero-emissions iron ore, which would preserve many more jobs, my colleague Jasper Jolly explains. Tata is expected to inject about £725m to help the move to greener production methods.
The scale of the job cuts first emerged last month, and bosses at Tata – which employs 8,000 people across the UK – met union representatives in London to discuss the timeframe soon after.
Thousands of jobs are also thought to be at risk at Scunthorpe. British Steel is understood to be meeting trade unions next week to discuss its plan to decarbonise, which could put as many as 2,000 jobs at risk.
Tata declined to comment directly on the plans for Port Talbot.
A spokesperson said:
“We hope to start formal consultation with our employee representatives shortly. In these discussions we will share more details about our proposals to transition to a decarbonised future for Tata Steel UK.
Port Talbot steelworkers braced for up to 3,000 job cuts https://t.co/K5Ovbz68hB
— Guardian news (@guardiannews) November 1, 2023
Updated
Back in the financial markets, shares in UK luxury carmaker Aston Martin have fallen over 10% after it cuts its sales forecast after production delays.
Aston Martin told the City this morning that the ramp up of production for its DB12 sports car was hit by supply problems, and delays to its infotainment system.
It has now cut its forecast for sales growth this year to 6,700, down from 7,000
Aston Martin’s third-quarter results also show it had halved its pre-tax loss, to £259.8m from £511.3m a year earlier.
Aston Martin’s exective chairman, Lawrence Stroll, was upbeat, saying:
“Our 110th anniversary year continues to be a fantastic one for the Company, and we are delighted with the strategic and financial progress we have made during the first nine months of 2023.
Our volumes, pricing, gross margins and EBITDA are showing strong improvement and we are delivering an accelerated industrial turnaround.
Shares in Aston Martin are down 10.9% at 193.8p, the lowest since February.
Job cut announcement expected at Tata Steel today
Tata Steel is expected to confirm as many as 3,000 job losses at its steelworks in Port Talbot today, in what would be a devastating blow to the south Wales economy.
The board of Tata Steel is thought to be meeting in India, where it is headquartered, to make a final decision, my colleague Jasper Jolly reports.
It is expected workers will be informed today at around lunchtime in the UK if the board follows through with the decision to close its blast furnaces.
Unions are braced for as many as 3,000 job losses by March. That would be a bitter blow for a town that grew up around the steelworks, but which has seen its prospects decline as it has fallen behind rivals.
The UK’s four blast furnaces are split between Tata’s Port Talbot and British Steel’s Scunthorpe, which is owned by Chinese steel company Jingye. They are under pressure to shift production away from production methods that produce inevitable carbon dioxide. Port Talbot’s two blast furnaces alone account for about 1.8% of UK emissions, contributing to the climate crisis.
Steel production is expected to continue on both sites, but both companies are expected to install electric arc furnaces, a technology that uses electricity to melt scrap steel, removing the need for the blast furnaces that dominate the landscapes of both towns and which require thousands of people to support them.
BoE expected to leave rates on hold tomorrow
The Bank of England seems almost certain to leave UK interest rates on hold at 5.25% at noon tomorrow.
The money markets indicate that ‘no change’ is a 94% chance, with just a 6% possibility of a quarter-point hike to 5.5%.
Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, says there are several reasons for the MPC to leave rates unchanged for the second meeting running.
“Since the last meeting in September, indicators of economic activity have remained less than impressive, wage growth has eased and hawk Jon Cunliffe has left the committee, with his replacement, Sarah Breeden, appearing likely to side with the doves.
“This would suggest no closer than a 6-3 vote in favour of no change. The BoE will probably strike a cautious tone on the growth outlook, and downward revisions to the GDP forecasts for 2023 and 2024 are on the cards.
Ryan says the BoE could well reiterate that further tightening is possible should inflation prove ‘persistent’, adding:
Indeed, we would not be surprised to see an upgrade to the inflation projections, which may suggest rate cuts remain a long way off.
Updated
There is some “pleasant reading” for the Bank of England in today’s manufacturing PMI report, argues Thomas Pugh, economist at RSM UK.
He says:
The weak economic environment meant that the employment index remained well below 50, although it did rise a little (46.3 to 46.4), indicating that employment growth remains weak.
What’s more, the input prices balance also remained well below 50 at 44.1, indicating that price pressures are continuing to ease. That will be complimented by the fall in the output prices balance to 48.6, suggesting that firms are cutting their prices.
Pugh also predicts that the overall UK economy probably contracted by 0.1% in Q3, but he doesn’t expect that to mark the start of a recession.
UK factory output in longest decline since 2008/09
Just in: Britain’s manufacturing downturn continued last month, as the factory sector continues to weigh on the economy.
The latest survey of purchasing managers at UK factories, just released, has confirmed that UK manufacturing contracted at the start of the final quarter – giving the Bank of England something else to ponder ahead of tomorrow’s interst rate decision.
Firms were hit by falls in output, new orders and employment in October, amid “difficult and uncertain market condition”, according to data firm S&P Global’s latest manufacturing PMI.
Production fell for the eighth successive month in October, the longest decline since 2008/09, when the financial crisis drove the world economy into recession.
Business optimism dipped to a ten-month low, encouraging firms to cut jobs for the 13th month running.
This pulled the manufacturing PMI down to 44.8 for October, below the ‘flash’ estimate of 45.2 recorded during the month, indicating that conditions worsened towards the end of last month.
🇬🇧 Manufacturing output in the #UK fell for the 8th consecutive month in October, the longest run of decline since 2008/09, with the #PMI posting 44.8 (Sep: 44.3). Weak demand led to sustained falls in new orders, #employment and #prices. @cipsnews https://t.co/ikihhLTOdy pic.twitter.com/4Ua1g2QPQq
— S&P Global PMI™ (@SPGlobalPMI) November 1, 2023
That shows that activity shrank in October, but at a slower rate than September when the manufacturing PMI was 44.3 (50 points shows stagnation).
Rob Dobson, Director at S&P Global Market Intelligence, explains:
“The UK manufacturing downturn continued at the start of the final quarter of the year, meaning the factory sector remains a weight dragging on an economy already skirting with recession.
Production volumes contracted for the eighth consecutive month, the longest sequence of continual decline since 2008-09, as weak demand at home and overseas led to a further retrenchment of new order intakes. Companies are finding trading conditions difficult as they face headwinds from client destocking, market uncertainty and the impact of the cost-of-living crisis on consumer demand.
Risks to the outlook remain skewed to the downside. Business optimism dipped to a ten-month low and manufacturers’ increased belt-tightening drove cuts to employment, purchasing and inventories.
Although both input prices and output charges fell in October, this brighter inflation outlook comes at the cost of increased recession risk, being a symptom of the broader weak demand malaise.”
Updated
UK mortgage rates have dipped again today, as lenders continue to cut borrowing costs amid hopes that interest rates have peaked.
Data provider Moneyfacts reports that:
The average 2-year fixed residential mortgage rate today is 6.29%. This is down from an average rate of 6.31% on the previous working day.
The average 5-year fixed residential mortgage rate today is 5.86%. This is down from an average rate of 5.87% on the previous working day.
Full story: UK house prices rose unexpectedly in October
Back in the UK property sector, David Hollingworth, associate director at L&C Mortgages says the lack of forced selling is encouraging.
Prices are likely to feel more downward pressure in the near term, though, Hollingworth predicts, adding:
“The hope will be that more activity will gradually return to the market next year, as the more stable mortgage market and the prospect of lower inflation helps to further the current falls in mortgage rates.”
Updated
Shares in fashion retailer Asos have dropped almost 9% this morning, after it warned that sales will drop again in 2024.
ASOS warned of up to 15% sales decline ahead before return to growth in 2025 - share price down over 5% this morning pic.twitter.com/mXyfIe6KHs
— IG (@IGcom) November 1, 2023
Asos has been hit by a shift away from buying online since the Covid pandemic restrictions ended, as well as heavy competition from companies such as the fast fashion online specialist Shein and retailers with a combination of stores and online retail, such as H&M and Zara.
And this morning it reported that sales fell 10% to £3.5bn in the year to 3 September as profits slumped to £296.7m from £32m a year before.
After a choppy October, the London stock market has begun November with a slight rise.
The FTSE 100 is up 10 points, or 0.15%, at 7332 points.
Smurfit Kappa, the packaging company, are leading the risers, up 3% after reporting that the decline in demand for cardboard boxes is slowing.
They’re followed by Next (+2.2%) and GSK (+1.9%) after both companies raised their earnings guidance this morning.
Investors will hope that November proves more profitable than October, which was the FTSE 100’s worst month since May.
Henry Allen and Jim Reid of Deutsche Bank explain:
October was another weak month for markets, with several factors driving losses across different asset classes.
In particular, the attack by Hamas on Israel on October 7 led to significant concerns about geopolitical risk, and investors remained cautious given concerns about a wider escalation. Alongside that, October saw another strong round of US economic data, which helped drive a fresh rise in long-dated borrowing costs and added to fears about the impact of higher rates on the broader economy.
That meant the S&P 500 lost ground for a 3rd consecutive month for the first time since the pandemic turmoil of March 2020, whilst US Treasuries lost ground for a 6th consecutive month.
The surprise rise in UK house prices in October indicates that the market is unlikely to crash, argues Martin Beck, chief economic advisor to the EY ITEM Club.
Beck points out that house price affordability has improved, with earnings rising faster than inflation, saying:
House prices unexpectedly rose in October on the Nationwide measure and by the largest amount since March 2022. Given the pressures facing the housing market, not least from higher mortgage rates, October’s increase may prove to be short-lived. But it reinforces the EY ITEM Club’s view that house prices are unlikely to see an outsized correction.
That the Bank of England is likely to hold Bank Rate unchanged again when it meets later this week should cement the recent fall in market interest expectations and quoted mortgage rates. With pay growth still strong, the ratio of house prices to earnings has fallen, improving affordability on this measure. Meanwhile, healthy household balance sheets and a still-tight jobs market should keep mortgage defaults and forced sales down.
However, the recent fall in quoted rates still leaves borrowing costs close to their highest since 2008. Confidence among households is weak and unemployment has started to pick up. The EY ITEM Club continues to expect a peak-to-trough fall in house prices of around 10%.
GSK raises annual forecasts after strong launch of RSV vaccine
We also have a profit forecast upgrade from UK pharmaceuticals firm GSK.
GSK has lifted its forecast for earnings growth this year, citing the strong launch of its respiratory syncytial virus (RSV) vaccine and steady demand for its shingles shot.
GSK now expects a rise of 17% to 20% in annual adjusted earnings per share, excluding the effect of currency swings, up from 14% to 17% growth previously forecast.
Meanwhile, sales are seen to rise by 12% to 13% in 2023 compared with earlier expectations of 8% to 10%.
Emma Walmsley, chief executive officer of GSK, says:
“GSK is delivering strong and sustained performance momentum, with another quarter of double-digit sales and earnings growth. Competitive performance was broadly based but benefitted particularly from the outstanding US launch of Arexvy, the world’s first RSV vaccine.
Our excellent execution supports an upgrade to our full-year 2023 guidance and we have clear momentum as we look ahead to deliver our 2026 outlooks. GSK’s longer-term outlook also continues to strengthen, with progress in our vaccines pipeline, the development of our ultra long-acting HIV portfolio and significant new prospects in respiratory.”
2023’s house price correction 'may finally be easing'
October’s surprise rise in UK house prices may show that this year’s correction in prices is finally easing, suggests Jonathan Hopper, CEO of Garrington Property Finders.
“Springtime this is not, but there are tentative signs of thawing in the property market.
“Official data shows the number of homes sold in September was down 17% on the same time last year, and buyers remain deeply price sensitive, but Nationwide’s data suggests 2023’s price correction may finally be easing.
“With the Bank of England expected to hold interest rates steady again tomorrow and average mortgage rates creeping down, the combination of better value homes – and the borrowing needed to buy them – could give the market a welcome lift as the nights draw in.
“While thus far it has been cash buyers who’ve capitalised most on falling house prices, greater clarity on interest rates should bring more mortgage-reliant buyers back into play.
Hopper adds that price cutting “remains widespread”, especially for new-build homes in places where there is abundant supply.
“There’s an increasing realisation that while a mortgage rate isn’t for life, the purchase price you pay is for the lifetime that you own a property. With prices down across all regions, more buyers are starting to look beyond mortgage rates at the money they can save on the price.
Updated
More retail news: Asos has warned sales will continue to fall in the year ahead – by much as 15% – after delayed results revealed it slumped to a near £300m annual loss.
Analysts have expressed fears that the online fashion site will need to raise new cash – potentially through the sales of its Topshop brand – with net debt including leases now at £648.5m, up from £533m a year before.
José Antonio Ramos Calamonte, Asos’s chief executive, said it had made “good progress” in “a very challenging environment” and would continue to bring in new more fashionable stock and invest in its brand.
The company plans to spend £30m more on marketing and said it was going “back to fashion” with its products “geared around fashion and excitement.”
House prices rise: snap reaction
Despite October’s pick-up, UK house prices may drop again as winter sets in, warns property agent Emma Fildes of Brickweaver.
Autumn moves show a mild uptake in houses prices, which edged up 0.9% in October 23 but remain -3.3% down on last year. As winter sets in, this reprieve may prove short lived, as many wait for the right climate before “spring”ing back into action @AskNationwide pic.twitter.com/mVia7iT4Mv
— Emma Fildes (@emmafildes) November 1, 2023
Guy Gittins, CEO of Foxtons, argues that the UK’s central bank could give the market more confidence by not raising interest rates again on Thursday.
All eyes will be on the Bank of England this week and the latest decision with regard to the base rate.
A decision to hold, or even reduce, interest rates is unlikely to generate a dramatic uplift in market activity, especially with Christmas fast approaching, but it will add confidence to the market ahead of January.”
Is it possible that house prices are beginning to find a bottom?
— InvestingReviews® (@ReviewInvesting) November 1, 2023
October average: £257,808;
Monthly change: 0.9%;
Annual change: -3.3%.
According to Nationwide, the average adjusted house price grew on a monthly basis, while the annual decline moderated from -5.3% last month. pic.twitter.com/mbMDT5lDtt
Alice Haine, personal finance analyst at Bestinvest, says the 0.9% rise in house prices in October offers a glimmer of hope to homeowners that the worst of the downturn may be over, adding:
The unexpected uplift led to an improvement in the annual rate of house price growth, which dropped by -3.3% from a decline of -5.3% in September.
While this may deliver relief to homeowners, the uptick reflects the low stock of properties up for sale as high borrowing costs and uncertain conditions caused many sellers to delay putting their home up for sale.
Next raises profit outlook again
Breaking: clothing retailer Next has raised its full-year profit outlook again, despite the cost of living squeeze on consumers.
Next has increased its full year guidance for profit before tax this financial year by £10m to £885m – it’s fourth increase in the last six months, following an early upgrade in September.
The upgrade comes as Next also reports a 4.0% rise in full-price sales in the third quarter of this year.
Next says:
Our revised guidance for full year full price sales growth is now +3.1%; this assumes that full price sales for the rest of the year are up +2.0%.
Profit generated from the additional sales achieved in the third quarter has added £10m to our full year forecast for profit before tax.
Introduction: House prices increase in October
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The health of the UK housing market will be on the mind of Bank of England policymakers this week, as they meet to set interest rates at noon tomorrow.
And the latest news is that house prices increased in October, but remained lower than a year ago, as a shortage of properties lifted prices after their recent falls.
Lender Nationwide has reported this morning that UK house prices rose by 0.9% month on month in October, compared to forecasts of a 0.4% fall.
The average price of a property sold last month rose to £259,423, up from £257,808, according to Nationwide’s data which is based on transactions involving a mortgage.
That still leaves house prices down 3.3% compared to October 2022, though, which is a smaller annual fall than the 5.3% recorded in September.
Robert Gardner, Nationwide’s chief economist, warns that housing market activity has remained extremely weak.
Gardner says:
This is not surprising as affordability remains stretched. Market interest rates, which underpin mortgage pricing, have moderated somewhat but they are still well above the lows prevailing in 2021.
“The uptick in house prices in October most likely reflects the fact that the supply of properties on the market is constrained. There is little sign of forced selling, which would exert downward pressure on prices, as labour market conditions are solid and mortgage arrears are at historically low levels.
“Activity and house prices are likely to remain subdued in the coming quarters. Despite signs that cost-of-living pressures are easing, with the rate of inflation now running below the rate of average earnings growth, consumer confidence remains weak and surveyors continue to report subdued levels of new buyer enquiries.
Figures on Monday showed that UK mortgage approvals slumped in September as stress build up in the property market, with the fewest home loans approved since January.
Also coming up today
The US central bank, the Federal Reserve, will set interest rates later today (6pm UK time). The Fed is expected to leave interest rates on hold, while it assesses whether its existing monetary tightening is enough to bring down inflation.
Executives from some of the world’s bigest tech firms are joining world leaders and artificial intelligence experts at Bletchley Park, the birthplace of computing, for Rishi Sunak’s AI summit.
The event will focus on frontier AI systems, the cutting-edge models that can perform a wide variety of tasks matching or exceeding the performances of the most advanced AI available today.
Flexible workspace provider WeWork is expected to file for bankruptcy as early as next week, as the SoftBank Group-backed company struggles with a massive debt pile and hefty losses.
We also get a healthcheck on UK factories’ performance last month, with the latest survey of manufacturing purchasing managers.
Overnight, PMIs from China, Japan and South Korea have shown activity shrinking while Vietnam and Malaysia also struggled last month, as the slowdown in China’s economy rippled.
The agenda
9.30am GMT: UK manufacturing PMI report for October
11am GMT: US weekly mortgage approval levels
12.15pm GMT: ADP survey of US private sector payrolls
2pm GMT: JOLTS survey of US job vacancies
6pm GMT: Federal Reserve sets interest rates
6.30pm BST: Federal Reserve press conference
Updated
