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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

UK housebuilding growth fastest since mini-budget; US job layoffs surge as hiring weakens – as it happened

Royal Mail Primark Ofcom United States United Kingdom ABF
Construction workers at a Homes by Strata building site, in Leeds, yesterday
Construction workers at a Homes by Strata building site, in Leeds, yesterday Photograph: Oli Scarff/AFP/Getty Images

Closing post

Time for a quick recap…

The UK’s housing sector has grown at the fastest rate since 2022, when the mini-budget knocked the industry almost two years ago, as the construction sector ‘turned a corner’ after a difficult start to the year.

But UK car sales fell in August, for the first time in just over two years, with the industry warning that the target for electric car sales this year will be missed.

In the US, a flurry of jobs data has painted a mixed picture, ahead of tomorrow’s official employment report, the Non-Farm Payroll.

Company payrolls rose by less than expected in August; they increased by 99,000, the smallest gain since 2021.

Job cuts also rose in August, with US employers announcing the greatest number of layoffs in five months.

But in better news, the number of Americans filing new claims for unemployment support fell last week, remaining at historically low levels.

Back in the UK, Royal Mail could be allowed to scrap second-class letter deliveries on Saturdays, as part of a shake-up of the company’s universal service obligation.

In the retail world, Currys has reported a jump in sales of electrical goods, thanks to the Euro 2024 mens football tournament and interest in AI.

But Primark has suffered a drop in UK sales this summer, as bad weather kept people off the high street and dampened demand for summer clothing.

The competition watchdog has launched an investigation into the Oasis ticket sales fiasco.

Petrol and diesel pump prices in the UK have fallen to their lowest levels in nearly three years.

John Lewis is reviving its “never knowingly undersold” price promise.

And in Germany, three executives from the defunct German payments firm have been ordered to pay €140m in damages today over loans to an Asian business partner that were never repaid.

Updated

Economic activity in the US services sector expanded for the second consecutive month in August, a new survey from the Institute of Supply Management shows.

The ISM’s Services PMI for August has risen to 51.5%, up from 51.4% in July.

This is the sixth month this year that the Services PMI has come in over 50 points, showing an expansion.

Services companies reported that business activity, new orders and employment all rose last month.

Steve Miller, chair of the Institute for Supply Management services business survey committee, says:

Slow-to-moderate growth was cited across many industries, while ongoing high costs and interest-rate pressures were often mentioned as negatively impacting business performance and driving softness in sales and traffic.

Although the Inventories Index increased by 3.1 percentage points into expansion territory in August, many respondents indicated their companies are still actively managing down their inventories.”

Back in the UK, there’s been a small shareholder rebellion at electricals retailer Currys, over executive pay.

Almost 12% of votes at its annual general meeting were cast against approving the Directors’ Annual Remuneration Report.

Wall Street has opened cautiously, as investors digest today’s flurry of US employment data.

The S&P 500 share index has risen by 2 points, or 0.05%, to 5,522 points at the open.

The narrower Dow Jones industrial average has dropped by 0.25%, following the slowdown in hiring and rise in layoffs in August.

Tech stocks, which do well in a low interest-rate environment, are rallying, pushing up the Nasdaq Composite index by 0.5%.

CMA launches investigation into Ticketmaster over Oasis concert sales

Britain’s competition watchdog has launched an investigation into Ticketmaster over the sale of tickets for Oasis concerts next year.

The Competition and Markets Authority will look into the ‘dynamic pricing’ which meant Oasis fans spent hours queuing, and were then presented with much higher ticket prices than advertised.

The CMA will look into whether the sale of Oasis tickets by Ticketmaster may have breached consumer protection law.

It will examine whether:

  • Ticketmaster has engaged in unfair commercial practices which are prohibited under the Consumer Protection from Unfair Trading Regulations 2008

  • People were given clear and timely information to explain that the tickets could be subject to so-called ‘dynamic pricing’ with prices changing depending on demand, and how this would operate, including the price they would pay for any tickets purchased

  • People were put under pressure to buy tickets within a short period of time – at a higher price than they understood they would have to pay, potentially impacting their purchasing decisions.

US jobless claims fall

We are being spoiled today, with three surveys of the US jobs market.

And the third – the weekly tally of unemployment claims – is better than expected.

There were 227,000 new ‘initial claims’ for jobless support last week, a drop of 5,000 on the previous seven days, and below the 230,000 which economists expected.

That may calm some concerns over the US economy.

US private payroll growth weaker than expected in August

Newsflash: In a further sign that the US jobs market is cooling, American firms added much fewer new jobs than expected last month.

The monthly survey of private sector hiring from payrolls operator ADP has found that private employers added 99,000 jobs in August.

That’s the smallest monthly rise since 2021, CNBC reports.

Economists had expected a rise of aroud 145,000.

This is the fifth month running that ADP has reported a slowdown in job creation among private employers.

And added to the rise in layoffs reported by Challenger earlier today, it paints a worrying picture about the US jobs market.

Nela Richardson, chief economist at ADP, says:

The job market’s downward drift brought us to slower-than-normal hiring after two years of outsized growth. The next indicator to watch is wage growth, which is stabilizing after a dramatic post-pandemic slowdown.

Large companies, with at least 500 staff, added 42,000 workers last month, reports ADP.

Medium-sized, with between 50 and 499 staff, added a total of 68,000.

Firms with between 1 and 19 employees added 3,000 staff, but those with 2o to 49 employees laid off 12,000.

Updated

John Lewis to bring back ‘never knowingly undersold’ promise

John Lewis is reviving its “never knowingly undersold” price promise, which it ditched just two and a half years ago, as part of a marketing blitz as it heads into the all-important Christmas selling season.

The retailer said it would use AI tools to match prices both in-store and online for 25 competitors including Marks & Spencer, Boots, Currys, House of Fraser and, on technology only – Amazon – from Monday.

Under the new scheme, customers will be able to get their money back if they can show they have found an item cheaper at one of the 25 brands within seven days.

Peter Ruis, head of the department store group, said John Lewis was making a multimillion-pound investment in the relaunch of the slogan – which it used for nearly a century before it was dropped in February 2022 – including in the technology, price changes and marketing.

More here.

Updated

In another sign that the US jobs market is softening, year-to-date hiring has weakened too.

According to Challenger tracking, announced hiring plans have fallen to the lowest year-to-date total since Challenger began tracking company hiring plans in 2005.

The Challenger job layoffs report also shows that 37,403 job cuts were attributed to “Cost-Cutting” last month, while 16,439 were due to “Market/Economic Conditions.”

For the first time since April, employers specified Artificial Intelligence (AI) as a reason for job cuts.

Last month, 5,943 cuts were due to AI, all of which occurred in the Technology space. So far this year, 7,126 cuts are due to AI.

Here’s some snap reaction to the rise in US layoffs announced in August:

US tech companies announced 39,563 job cuts in August, today’s Challenger report shows, out of 75,891 in total.

Andrew Challenger says the rollout of artificial intelligence systems is one factor driving layoffs:

The Tech sector is moving from a growth and innovation focus into one of profitability and efficiency. AI and automation adoption is also driving job cuts at Tech companies across roles and functions. This talent, however, is still in high demand.

Many of these professionals will land elsewhere, in and outside of the Tech industry. That said, we’re entering a period of slower hiring, so it may take longer than it has at any point in the last decade,”

Job cuts announced by US companies surge in August

Newsflash: There was a surge in layoffs at US companies in August, a new survey shows.

Firms announced 75,891 layoffs last month, roughly triple the number in July, outplacement firm Challenger, Gray and Christmas has reported.

More than half the layoffs were led by the technology sector, where companies have been cutting their workforce as the pandemic boom in demand for IT services faded.

Challenger vice president Andrew Challenger says:

“August’s surge in job cuts reflects growing economic uncertainty and shifting market dynamics. Companies are facing a variety of pressures, from rising operational costs to concerns about a potential economic slowdown, leading them to make tough decisions about workforce management.”

This jump in layoffs may add to concerns that the US labor market is cooling.

Updated

Greenpeace block access to Unilever HQ over single-use plastics row

Greenpeace UK have blocked access to Unilever’s headquarters in central London on Thursday morning claiming the consumer goods company is “trashing the planet and harming communities” through single-use plastics.

Members of the environmental campaign group have locked themselves onto barricades made from giant Dove products, one of Unilever’s biggest brands, with each product’s logo changed to a dead Dove.

Greenpeace is calling on Unilever to remove single-use plastic from its operations and phase it out fully within a decade, starting with plastic sachets, which they say are “near impossible to collect and recycle”.

Will McCallum, co-executive director at Greenpeace UK, said:

“Unilever’s plastic pollution is trashing the planet and harming communities.

“They hide behind the clean, respectable face of brands like Dove but we’re here today peeling back this facade to show the ugly truth behind it.”

He added:

“They must stop selling plastic sachets now, commit to phasing out single-use plastic within a decade and advocate for this same level of ambition at the final round of UN Global Plastics Treaty negotiations in November.”

Three former Wirecard executives ordered to pay €140m damages

Wirecard ex-CEO Markus Braun and two other executives at the defunct German payments firm have been ordered to pay €140m in damages today, Reuters reports, over loans to an Asian business partner that were never repaid.

A Munich court judge upheld claims by insolvency administrator Michael Jaffe that Braun and others had violated their duties in deciding to provide the loans to a company in Singapore.

The verdict, which is not final, is the latest chapter in one of Germany’s most egregious corporate scandals and is separate to the main trial against Braun and other executives. over Wirecard’s demise.

The company collapsed in June 2020 with a €1.9bn hole in its balance sheet, turning the spotlight on politicians who backed it and regulators accused of moving. too slowly to investigate allegations against it.

Braun, deputy finance chief Stephan von Erffa and Wirecard’s Asia representative Oliver Bellenhaus are currently on trial in Munich accused of fraud and falsifying financial statements.

Braun denies all wrongdoing.

In August, German prosecutors charged another two former Wirecard executives with several counts of embezzlement.

Jaffe and investors are trying to sue Wirecard managers and auditors for damages in various civil lawsuits.

Unions at Volkswagen could propose a four-day week, to avoid factory closures and job cuts at the German carmaker.

Christiane Benner, chair of the IG Metall union, has said it is “conceivable” that it could propose a four-day week, saying:

“We will leave no idea unexplored.”

But Benner cautioned that it is impossible to lay out detailed proposals without more information on what solutions VW is proposing, saying:

“We need forward-thinking ideas on where potential can be found. VW has survived difficult situations before.”

Yesterday VW told staff that it is considering shutting two German factories, in what would be the carmaker’s first closures ever in its home country.

Ireland on brink of technical recession

Newsflash: Ireland’s economy is on the brink of recession, by some measures, after activity shrank in the second quarter of this year.

New estimates from Ireland’s Central Statistics Office show that Ireland’s gross domestic product (GDP) fell by 1.0% in the April-June quarter. That’s down from an initial estimate of 1.2% growth in the quarter.

GDP isn’t a great measure of Ireland’s economy, though, as it can be distorted by multinational firms based in the Republic.

Modified Domestic Demand (MDD), a broad measure of underlying domestic activity that covers personal, government, and investment spending, also shows a decline. It decreased by 0.5% in Q2 2024.

However, Gross national product (GNP) – which measures the total value of goods and services produced by a country in one year, including profits made in foreign countries – rose by 3.3% in the quarter.

This puts Ireland on the edge of a technical recession – defined as two quarterly contractions in a row. In Q1, GDP rose by 0.9% while MDD inceased by 1.4%.

The CSO reports that Ireland’s domestic sectors contracted by 1.8% in the April-June quarter with the multinational-dominated sectors declining marginally by 0.1%.

Assistant Director General with responsibility for Economic Statistics, Chris Sibley, says:

“In today’s results, Gross Domestic Product (GDP) is estimated to have fallen by 1.0% in April, May, and June (Q2) 2024.

The globalised Industry sector fell by 0.7% in Q2 2024 compared with Q1 2024 while the Information & Communication sector posted a decrease of 0.9% over the same period.

Overall, the combined multinational-dominated elements of the Industry and Information & Communication sectors declined by 0.1% in the quarter. These sectors accounted for 43.9% of total value added in the economy, compared with a 56.1% share for all other sectors.

Labour’s election success in early July could have boosted activity in the commercial building sector last month.

Today’s PMI report says:

Commercial activity was the best-performing segment, despite the pace of growth slipping to its lowest since March. A number of firms noted a boost from rising sales enquiries and the release of new orders following the general election.

S&P Global adds that respondents to its PMI survey said improving economic conditions and greater domestic political stability had lifted customer demand, leading to an increase in orders last month.

Key event

The Labour government’s housebuilding push should help the recovery in housebuilding to strengthen, predicts the EY ITEM Club.

EY ITEM Club say that housebuilders should feel more confident about starting projects, as housing transactions and prices have started to recover and the government has made housebuilding a key priority.

Peter Arnold, EY UK chief economist, says:

House prices and transactions have passed the bottom and are starting to recover, which will bolster firms’ confidence in building.

The new government’s focus on housebuilding as a key pillar of its growth plan is also likely to be supporting confidence, although capacity constraints, particularly in terms of the availability of staff with the appropriate skills, will need to be overcome.”

UK housebuilding accelerated last month thanks to the ongoing economic recovery, and lower borrowing costs, explains Thomas Pugh, economist at RSM UK.

Pugh adds:

Mortgage approvals jumped in July and annual house price growth picked up as well, clear signs of a revival in the housing market.

Pugh points out that the future activity index and new orders measures within the PMI are still high indicating optimism in the industry, adding:

“What’s more, there was further good news for policy makers as the input prices balance dropped, suggesting that price pressures are easing in the construction sector as well as the services and manufacturing sectors. That bodes well for interest rate cuts later this year.

Although UK housebuilding activity picked up last month, hiring across the construction sector did not.

Staffing levels were broadly unchanged, according to the purchasing managers surveyed for today’s construction PMI report. That ends a three-month period of expansion.

Firms also cut back on sub-contractor usage, for the first time since January.

Some firms noted that elevated wage pressures had led to delays with staff hiring, while others commented on a lack of candidates to fill vacancies. S&P Global explains.

UK housing activity rises at quickest pace since September 2022

Newsflash: Growth in Britain’s housebuilding sector has hit its highest rate since the mini-budget almost two years ago.

Data provider S&P Global has reported that UK residential construction work “gained momentum” in August, with growth accelerating to its fastest since September 2022.

This increase in housebuilding was due to “improving market conditions” and lower borrowing costs, S&P Global says.

However, civil engineering growth slowed last month, which pulled the overall construction PMI down to 53.6 in August, down from July’s 26-month high of 55.3.

Tim Moore, economics director at S&P Global Market Intelligence, says:

“The UK construction sector appears to have turned a corner after a difficult start to 2024, with renewed vigour in the house building segment the most notable development in August. Residential work expanded at the fastest pace for almost two years as lower borrowing costs and a gradual recovery in market conditions helped to boost activity.

Commercial building was the best-performing part of the construction sector as the improving UK economic backdrop resulted in stronger order books, but the postelection bounce in demand faded somewhat in August.

Borrowing costs jumped after the September 2022 mini-budget, driving up mortgage rates and making it harder for buyers to get a home loan. Mortgage rates have been dropping this summer, as the City anticipates more interest rate cuts from the Bank of England.

The Labour government has pledged to “get Britain building again” by bringing back compulsory housebuilding targets, and to build 370,000 homes a year during the course of the current parliament.

Updated

Petrol and diesel pump prices fall to lowest in nearly three years

Good news for motorists who haven’t made the switch to electric vehicles – fossil fuel costs have hit a near three-year low.

Motoring body the AA reports that the average price of petrol dropped to 139.5p a litre yesterday, the lowest since October 2021.

Diesel yesterday fell to 144.2p a litre, on average, also the lowest since October 2021 – a few months before Russia’s invasion of Ukraine sent energy costs soaring.

The AA says the 5p fuel duty cut made in the March 2022 budget helped push price down.

Edmund King, AA president, warned the government against removing the cut in this October’s budget – something that is reportedly under consideration.

King says:

“Pure and simple, the only reason why pump prices are at a three-year low this week is because of the 5p fuel duty cut. Removing it threatens to send millions of low-income drivers back into the era of ‘perma-high’ road fuel prices.

However, the freeze in fuel duty does cost the Treasury billions of pounds per year, as these posts show:

SMMT: UK on track to miss Zero Emission Vehicle Mandate for EV sales

So far this year, the market share held by battery electric cars (BEVs) has risen to 17.2%, up from 16.5% in 2023.

The SMMT expect it to rise to 18.5% by the end of the year thanks to increasing model choice – with some 364,000 BEVs registrations forecast for the year.

But, that means the UK would miss the goal that 22% of each carmaker’s sales must be pure battery cars in 2024, laid out in the Zero Emission Vehicle Mandate (as the industry warned last month).

The SMMT says “urgent action is needed”, including binding targets on public chargepoint provision and the reintroduction of incentives to encourage private buyers to go electric.

Mike Hawes, SMMT chief executive, says:

August’s EV growth is welcome, but it’s always a very low volume month and so subject to distortions ahead of September’s number plate change.

The introduction of the new 74 plate, together with a raft of compelling offers and discounts from manufacturers, plus growing model choice, will help increase purchase consideration and be a true barometer for market demand. Encouraging a mass market shift to EVs remains a challenge, however, and urgent action must be taken to help buyers overcome affordability issues and concerns about chargepoint provision.

UK car sales dip in August, BEV sales rise

Newsflash: UK car sales fell in August, ending a 24-month run of growth.

Industry body SMMT reports that new car registrations dipped by 1.3% last month, to 84,575 units.

August is traditionally a snoozy month for car dealers, as many buyers preferring to wait for September’s new number plate (or are busy on holiday instead!).

This time, fleet purchases (companies buying cars for their business) fell by 1.2% while sales to private buyers were 0.2% higher. Business registrations sank by nearly a third to just 1,136 units.

There are some interesting trends among the types of cars being bought.

Registrations of electric cars (Battery electric vehicles or BEVs) jumped by 10.8%. This lifted the BEV market share to 22.6%, the highest for a month since December 2022.

The SMMT says this is due to “heavy discounting by manufacturers over the summer and a raft of new models attracting buyers.”

Petrol sales fell 10.1%, while diesel dropped by 7.3% – but together made up 56.8% of all new registrations in August.

Plug-in hybrid (PHEV) registrations declined by 12.3%, but hybrid electric vehicle (HEV) uptake increased by 36.1%.

Yesterday, Volvo Cars abandoned its target of sell only electric cars by 2030, citing “changing market conditions and customer demands.”

Updated

We’ve covered plenty of bad economic news from Germany recently, with its economy shrinking in April-June and carmaker Volkswagen considering factory closures.

So it’s a relief to have some good news from Europe’s largest economy.

German factory orders rose by 2.9% month-on-month in July, statistics body Destatis reported this morning, smashing forecasts of a 1.5% fall.

This is “a rare piece of good news for the country’s important manufacturing sector,” say analysts at Saxo.

However…. the figures are flattered by some large orders, such as aircraft, ships, trains, and military vehicles.

Strip those out, and industrial orders were 0.4% lower than in June.

Updated

Asos sells Topshop and Topman into new joint venture

We also have results from online clothing retailer ASOS this morning, but they don’t report problems from the bad weather.

ASOS told the City that its adjusted profits for the current financial year are expected to hit the top of analyst estimates…. but its sales will be “slightly below guidance”.

ASOS has also struck a deal to sell a majority of its stake in Topshop and Topman brands – which it acquired in 2021 – to a new joint venture formed with Danish family office HEARTLAND, which would own 75% of the new entity.

ASOS expects to get about £118m from the sale, and will hold the remaining 25% of the joint venture.

After 15 years, luxury goods brand Burberry’s run in the FTSE 100 index is soon to end.

Burberry is being relegated down to the FTSE 250 index, of medium-sized companies, later this month.

FTSE Russell, the global index provider, announced last night that insurer Hiscox will take Burberry’s place in the blue-chip FTSE 100 index in the next quarterly reshuffle.

Burberry’s relegation isn’t a surprise; its market capitalisation has fallen to £2.23bn, meaning it was no longer valuable enough to hold a place in the FTSE 100.

Elsewhere, UK computer firm Raspberry Pi is joining the FTSE 250 following its stock market float this summer.

Updated

Bloomberg: China detains AstraZeneca staff in data, drug-import probes

Police in China have detained five current and former employees of British drugmaker AstraZeneca for questioning about potential illegal activities, Bloomberg are reporting.

Bloomberg explains:

The individuals being held are all Chinese citizens who marketed cancer drugs in AstraZeneca’s oncology division, the people said, asking not to be identified discussing private information. The investigation is being led by police in the southern metropolis of Shenzhen, and the detentions took place earlier in the summer, the people said.

One probe is related to the company’s collection of patient data, and whether that infringed China’s data-privacy laws, according to the people. Authorities are also looking into some of the individuals’ involvement in importing a liver cancer drug that hasn’t been approved for distribution in mainland China, one of the people said.

China made up 13% of AstraZeneca’s global sales last year, bringing in revenues of nearly $6bn of a total $44bn, making it the biggest overseas pharmaceuticals company by sales.

The company had considered spinning off its business in China and listing it in Hong Kong or Shanghai to shield it from geopolitical tensions between Beijing and Washington.

Shares in Associated British Foods have fallen 3.8% at the start of trading in London, as traders react to the drop in sales at its UK Primark stores this summer.

They’re the top faller on the FTSE 100 index.

Currys sales boosted by Euro 2024 and AI

While the cold and wet British summer dampened demand at Primark, electricals retailer Currys was growing its sales over the summer.

Currys grew its like-for-like sales in the UK and Ireland by 5% in the 17 weeks to 24 August.

This was partly due to England’s performance in EURO 2024, it says, as some families bought new TVs to enjoy the Three Lions’ occasionally choppy route to the final.

Currys is also seeing intest in AI computing products, it says.

Alex Baldock, Currys chief executive, explains:

“Trading is going well, strengthening our confidence in growing profit and free cash flow again this year.

New AI-enabled computers are bringing excitement and innovation to customers, who are coming to our stores to learn more about the technology, helping us take almost 50% share of the total laptop market.

ABF had been expected to release its trading update this week, but has brought it forward due to the disappointing sales at Primark and the lower than expected sugar profits.

Retail analyst Nick Bubb says:

It’s a bit of shock to hear that mighty Primark has been over 3% down LFL in the last 3 months…

[that’s the fall in UK like-for-like sales].

Citizens Advice: USO must be reformed

Cutting deliveries of second-class letters to just two or three days a week would save Royal Mail hundreds of millions of pound a year.

As my colleague Alex Lawson explained here in April, a postal worker could deliver on a single route on Monday, Wednesday and Friday, and on another route on Tuesday and Thursday. First class letters would then be shipped faster on Royal Mail vans also used for parcels.

Citizens Advice say that changes to the universal service obligation are needed – but should benefit customers, not just save Royal Mail money.

Tom MacInnes, Interim Director of Policy at Citizens Advice, says:

“With Royal Mail failing to meet its targets for nearly half a decade, the current Universal Service Obligation (USO) clearly doesn’t protect consumers as it should.

“Reforms to the USO need to address this. They can’t just be a disguise for cuts that prioritise saving Royal Mail money over providing a good standard of service.

“We agree that improving reliability and affordability is essential. But cutting deliveries won’t automatically lead to the more reliable service people need.

“Ofcom has acknowledged some of Royal Mail’s failings but we need to see that recognised with action. The regulator needs to make sure we have a USO that serves its basic purpose of protecting consumers - not Royal Mail’s bottom line.”

Royal Mail: we have to change the Universal Service

Royal Mail’s parent company, International Distribution Services, says the universal service obligation needs to change.

Responding to the news that Ofcom is considering its proposal to downgrade second class deliveries, Martin Seidenberg, Group CEO of IDS, says:

“To save the Universal Service, we have to change the Universal Service.

“Letter volumes have fallen from their peak of 20 billion to just 6.7 billion a year today meaning the average household now receives just four letters per week. Yet whilst most countries have adapted their Universal Service requirements to reflect the new reality, in the UK the minimum requirements have not changed.

“Our proposal for the future of the Universal Service has been developed after speaking to thousands of people across the country and is designed to protect what matters most for customers. It can be achieved through regulatory change with no need for new legislation.

“The Universal Service faces a very real and urgent financial sustainability challenge. Change cannot come soon enough. We look forward to continuing to engage with all our stakeholders to secure a financially sustainable Universal Service for many years to come.”

Primark suffers from bad summer weather

Another British institution, Primark, has been hit by the grizzly weather this summer.

Primark’s owner, Associated British Foods, warned shareholders this morning that like-for-like sales at the clothing chain have fallen in the last six months.

Like‐for‐like sales are expected to decrease by around 0.5% in the six months to 14 September, driven by a 0.9% decline in the last three months.

In the UK, alone, like‐for‐like sales are expected to decrease by around 2.0% in the six months to 14 September, including a 3.1% drop in the last quarter – with customer visits “impacted by challenging weather, particularly in April and June.”

ABF says:

This primarily reflects unfavourable weather in the UK and Ireland in H2, which resulted in lower footfall and particularly impacted sales of our seasonal lines in womenswear and footwear.

But thanks to new store openings, Primark’s overall revenue growth is expected to be around 4% for the last six months.

Last summer was the coolest since 2015, according to provisional Met Office statistics.

This made it more of a ‘drat summer’ than a ‘brat summmer’ for retailers hoping to shift summery garments.

Or, as CEO George Weston puts it this morning, “the British weather was not in Primark’s favour this summer.”

ABF has also flagged that profits at its sugar business will be below expectations, due to “a sharp fall in European sugar prices” this year.

Updated

Introduction: Royal Mail’s delivery performance "must improve"

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Britain’s Royal Mail “must improve” its delivery performance, says communications regulator Ofcom this morning, as it proposes changes to its second-class letter service.

The proposals are meant to secure the future of the universal postal service, it says.

Ofcom warns that Royal Mail’s delivery performance has simply “not been good enough” in recent years. In the last five years, the regulator has found it in breach of its quality of service obligations twice and fined it both times.

The regulator says:

We have been pressing the company on what it is doing to turn things around, and we are currently investigating its latest failure to hit its annual delivery targets. Regardless of how the universal service evolves, Royal Mail’s delivery performance must improve.

Ofcom has been examining potential changes to the universal obligation – that compels the postal operator to deliver letters six days a week (Monday to Saturday) and parcels five days a week (Monday to Friday) to every address in the UK.

And today, it is proposing that Royal Mail should be allowed to downgrade its second class service, and no longer deliver letters with a 2nd class stamp on Saturdays.

The regulator argues that this would give Royal Mail flexibility to improve its service, and is going to consult on the plan.

Ofcom says today:

The evidence we have gathered so far also suggests people want a next-day service available six days a week for when they need to send the occasional urgent letter or card. However, people acknowledge that most letters are not urgent.

If Second Class letters continued to be delivered within three working days but not on Saturdays - and First Class remained unchanged at six days a week - it would enable Royal Mail to improve reliability, make substantial efficiency savings, and redeploy its existing resources to growth areas such as parcels.

This proposal is likely to please Royal Mail – back in April, it asked Ofcom to let it reduce deliveries of second-class letters to just two or three days a week

Lindsey Fussell, Ofcom’s group director for networks and communications, says Royal Mail must do better:

Postal users’ needs are at the heart of our review. If we decide to propose changes to the universal service next year, we want to make sure we achieve the best outcome for consumers.

So we’re now looking at whether we can get the universal service back on an even keel in a way that meets people’s needs. But this won’t be a free pass for Royal Mail – under any scenario, it must invest in its network, become more efficient and improve its service levels.

The agenda

  • 9am BST: UK new car sales

  • 9.30am BST: UK construction PMI for August

  • 9.30am BST: Bank of England Monthly Decision Maker Panel data for August 2024

  • 11am BST: Irish Q2 GDP and GNP

  • 1.15pm BST: ADP private US payrolls

  • 1.30pm BST: US weekly jobless claims

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Salon
Salon
Trump's Grammatical Time Machine
The president-elect uses conditional grammar to craft self-fulfilling speculative historical fiction.
Reason
Reason
Duct-taped banana artwork sells at auction for almost £5m to crypto entrepreneur
Justin Sun purchased a certificate of authenticity that gives him the authority to duct-tape a banana to a wall and call it “Comedian.”
Evening Standard
Evening Standard
Banana Taped To A Wall Sells For $6.2 Mn In New York
A fresh banana taped to a wall -- a provocative work of conceptual art by Italian artist Maurizio Cattelan -- was bought for $6.2 million on Wednesday by a cryptocurrency entrepreneur at a New York auction, Sotheby's announced in a statement.
International Business Times
International Business Times
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