BUSINESS LIVE: Wage development slows; Vodafone agrees Microsoft AI deal

On Jan 16, 2024

Updated: 07:55, 16 January 2024

Wage development excluding bonuses slowed to six.6 per cent in November, down from 7.2 per cent in October, recent information from the Office for National Statistics reveals. Easing wage development will encourage market confidence of looming Bank of England rate of interest cuts.

The FTSE 100 will open at 8am. Among the businesses with reviews and buying and selling updates in the present day are Vodafone, Ocado, THG, Cairn Homes and Experian. Read the Tuesday 16 January Business Live weblog beneath.

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Ocado worth hikes offset shrinking baskets

Ocado Retail is on observe to return to constructive earnings for the 2023 monetary yr after greater promoting costs offset shrinking common order sizes and its energetic buyer base grew to neatly a million.

The 50:50 three way partnership between Ocado Group and Marks & Spencer noticed revenues bounce 10.9 per cent within the 13 weeks to 26 November, reflecting a fourth consecutive interval of quarter-on-quarter development and a rise on the 7.2 per cent reported for the third quarter.

Ocado Retail benefited from a 5.9 per cent rise in energetic prospects to 998,000, a 4.8 per cent enhance in volumes, or variety of objects bought, and a 3.8 per cent rise in common basket worth.

Its common basket dimension by variety of objects fell 1.6 per cent to 43.8.

‘Our buying and selling efficiency, and our give attention to prices, has translated by means of to our backside line, returning to constructive EBITDA for the total yr,” the joint venture said.

It made a loss of 4 million pounds in the 2021-22 year.

Ocado Retail also said it hit its highest ever level of sales over the peak Christmas trading period. Overall sales increased 7 per cent between 20 to 24 December.

For the brand new 2023/24 yr, the three way partnership forecast income development within the ‘mid-high single digits’.

Vodafone agrees Microsoft AI deal

Vodafone has agreed a ten-year partnership with Microsoft to bring generative AI, digital, enterprise and cloud services to more than 300 million businesses and consumers across its European and African markets.

The British company will invest $1.5billion in customer-focused AI developed with Microsoft’s Azure OpenAI and Copilot technologies, it said, and will replace physical data centres with cheaper and scalable Azure cloud services.

Microsoft will in turn become an equity investor in Vodafone’s managed IoT (Internet of Things) platform when it is spun out as a standalone business by April 2024, and help scale Vodafone’s mobile financial platform in Africa.

Vodafone boss Margherita Della Valle said:

‘Today, Vodafone has made a bold commitment to the digital future of Europe and Africa. This unique strategic partnership with Microsoft will accelerate the digital transformation of our business customers, particularly small and medium-sized companies, and step up the quality of customer experience for consumers.’

‘Employers remain cautious about hiring amid uncertain economic conditions’

Alice Haine, personal finance analyst at Bestinvest:

‘The UK jobs market continued to show signs of softening at the end of last year with the estimated number of payrolled employees dropping by 24,000 in December and vacancies falling by 49,000 on the quarter to December to 934,000 – the 18th consecutive period of decline – as employers remained cautious about hiring amid uncertain economic conditions.

‘The cooling jobs market is feeding through into wage growth with the increase in regular pay, excluding bonuses, easing to 6.6% on the year in the three months to November.

‘Annual growth in average total pay, which includes bonuses, also dipped over the same period to 6.5%. In real terms, real salaries grew 1.4% and total pay 1.3% once inflation is factored in – meaning that incomes are growing faster than price rises and stretching further than they did a year ago.

‘The hope is that real pay growth will remain positive in 2024 because inflation is expected to ease further over the course of the year.

‘While some forecasters expect inflation to drop rapidly in the first quarter amid lower energy prices, such optimism may be tempered by the growing tensions in the Red Sea and wider Middle East – a reminder that global price pressures are still very much with us and the risk of change is always a factor.’

Higher for longer rates of interest might drive extra job losses

Richard Carter, head of fixed interest research at Quilter Cheviot:

‘The external market is looking for signs that the labour market is loosening as it will show that monetary policy is working and inflation will continue to fall and stabilise.

‘However, keep rates too high for too long and the Bank might overshoot its aim and cause more pain than necessary in the labour market.

‘So far though, in October to December 2023, the estimated number of vacancies in the UK fell by 49,000 on the quarter to 934,000.

The estimate of payrolled employees in the UK for December 2023 decreased by 24,000 on the revised November 2023 figure to 30.2 million.

‘This may be as a result of a change in the method of data collection but while there is now certainly more optimism in the air in respect to the UK’s economic future, businesses are still being battered by the cost of living storm.

‘This price could nicely bounce up if the Bank does certainly hold charges greater for longer.’

Wage development slows to six.6%

Wage growth excluding bonuses slowed to 6.6 per cent in November, down from 7.2 per cent in October, fresh data from the Office for National Statistics shows.

Easing wage growth will encourage market confidence of looming Bank of England interest rate cuts.

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