BUSINESS LIVE: Unemployment falls as wage growth slows; Just Group raises forecasts; Dowlais sees unit sales

Wilko’s former owners have no intention of helping plug the £70m hole in the bankrupt retailer’s pensions, dealing a further blow to thousands of former workers.

The discount chain went bankrupt a year ago, causing the loss of 12,500 jobs and the closure of 398 stores.

Sam North, Market Analyst at eToro:

‘After a major back-and-forth in the US jobs report earlier this month, attention turned to the UK report to see how contagious it was. The weaker-than-expected US report spooked the market, contributing to last Monday’s big sell-off, but those hoping for similar headlines in the UK were disappointed.

‘We have started a week full of UK data well. The employment data triggered a strong market reaction, driven by a significant fall in the unemployment rate and a notable increase in employment figures.

‘This strong labour market performance has more than offset slightly weaker wage growth, which was influenced by NHS bonus payments from the previous year.

‘As a result, we saw GBP/USD gain momentum, moving from 1.2779 to a session high of 1.2801, underlining the market’s confidence in the UK’s economic resilience. Attention will now turn to tomorrow’s inflation report, with the Bank of England expecting to see a stable figure around 2%.’

UK wage growth slowed to its lowest level in more than two years, while the unemployment rate also fell surprisingly, according to official figures.

The Office for National Statistics (ONS) revealed that regular pay growth was 5.4 per cent year-on-year in the three months to June.

However, this figure was down from 5.7 percent in the previous three months and represented the smallest increase since the period to July 2022.

Dowlais Group is exploring a possible sale of its GKN Powder Metallurgy unit, among other options, after the company cut its annual revenue forecast due to reduced production volumes at its automotive unit.

The company, which was spun off from aerospace supplier Melrose Industries in April 2023, said it now expected its 2024 adjusted revenue to fall in the mid- to high-single digits.

It had previously expected its revenue in 2024 to be “slightly below” the previous year’s level.

The Dowlais unit is exploring options to make powdered metal parts for the automotive and industrial sectors and is the group’s second-largest business by revenue.

Dowlais also sold its hydrogen business for a nominal consideration and will take an £18m hit from the sale in 2024, the group said.

Thomas Pugh, economist at RSM UK:

‘The labor market appears to be continuing to recover after last year’s mini-recession.

‘In the three months to June, employment rose by 97,000 people compared with the previous three months. This, combined with a rise of 27,000 people in the number of inactive people, which now stands at 9.41 million, approximately 22.2% of the working-age population, was enough to reduce the unemployment rate to 4.2%.

“If wage growth continues to fall for the rest of this year, it would give the MPC ample cover to cut rates again towards the end of the year, probably in November, and then be more aggressive in its rate-cutting cycle in 2025, so we currently have four rate cuts planned for next year.”

Universal Music has signed a deal with Facebook owner Meta as it attempts to allay concerns over artificial intelligence.

The world’s largest music label has signed a deal with the social media giant that will allow users to share songs without violating copyright.

Just Group has raised its 2024 profit guidance after the insurer’s first-half earnings beat market expectations thanks to strong new business in the retail and pension risk transfer sectors.

The company, which specializes in annuities (also known as pensions that pay a fixed income for life), has reaped the benefits of growing demand for insurance for corporate pension plans, known as bulk annuities.

Underlying operating profit rose 44 percent to 249 million pounds in the six months to June 30, compared with analysts’ average forecast of 208 million pounds in a consensus compiled by the company.

In March, the London-listed company forecast it would at least double its 2021 operating profit of £211m this year.

Just Group said on Tuesday it expects to “substantially” exceed that forecast.

The UK unemployment rate fell to 4.2 per cent in the three months to June 2024, beating forecasts of 4.5 per cent, as wage inflation also fell over the period, new data from the Office for National Statistics shows.

Average weekly earnings, excluding bonuses, were 5.4 percent higher than a year earlier during the period, in line with forecasts and down from 5.8 percent in the previous three-month period.

The Bank of England said it would closely monitor wage growth as it cut interest rates on August 1, after keeping them at a 16-year high of 5.25 percent for almost a year.