UK building sector activity falls, as house prices drop again; eurozone inflation down – business live | Business

Investors are bracing for the latest US jobs report, due in around 30 minutes time.

December’s Non-Farm Payroll is expected to show that around 200,000 new jobs were added across the US last month, a slowdown on November’s 263,000 (which may be revised today).

The NFP is due at 1.30pm UK time, or 8.30am on the East coast of the US.

A strong jobs report could unsettle markets, as it could spur the US Federal Reserve central bank to continue tightening monetary policy to fight inflation.

US employment data yesterday was stronger than expected – private sector payrolls rose by 235,000, while new jobless support claims fell, which lifted the dollar and hit stocks.

“Markets are on edge,” said Baylee Wakefield, multi-asset portfolio manager at Aviva Investors, via Reuters.

Wakefield adds:

“We’re all hoping for that turning point in where inflation peaks, so investors are looking at these (jobs) releases very closely.

This is an environment where you’re going to see a lot of volatility based on small details.”

Report into Bulb’s administration published

Alex Lawson

A report on the progress of the administration of collapsed energy supplier Bulb has been published, with administrators Teneo still awaiting approval of their £25m fee, our energy correspondent Alex Lawson reports.

Bulb, which has around 1.5m customers, went bust in November 2021 and spent a year in an administration process overseen by government before a deal with Octopus Energy was agreed. That deal completed just before Christmas but is subject to a judicial review after complaints from rival suppliers.

In November, a judge at the Insolvency and Companies Court asked for Teneo’s fees to be scrutinised by a High Court judge. Today’s report says this hearing is due to take place in “early 2023”. The first 55% of the fees have been paid as an interim measure.

Among the other costs, £4.9m was paid in “professional fees” which includes legal advice and the services of Lazard, the advisory firm which ran the sale process.

The report says administrators have spent the year: ensuring Bulb’s customers do not suffer interruptions to supply, replacing the chief financial officer, handling price changes and “implementing improvements to customer complaints processes to reflect increase in inflow from increased media coverage and prices rises”.

The report also confirms that it is “unlikely that there will be a distribution for unsecured creditors”.

The option for Bulb to draw on up to £3.9bn of funding to buy energy was made in the autumn amid soaring wholesale gas prices, but later reduced to £2.2bn. Around £1.1bn has been drawn on to date, and the government has pledged up to £4.5bn in further funds.

Sarah Butler

Upmarket restaurant group D&D London is closing four of its outlets blaming “spiralling utility, food and beverage costs and the unstable labour market.”

The group said its Avenue and Radici restaurants in London, East 59th in Leeds and Klosterhaus in Bristol had closed this month. Klosterhaus only opened in October 2020 so has traded for just over two years.

There are fresh job losses in the troubled crypto currency world today.

Crypto exchange Huobi plans to lay off about 20% of its staff, the company told Reuters, in the latest sign of sharp cost cutting in the industry as investor interest in digital assets slumps.

Here’s the story:

“The planned layoff ratio is about 20%, but it is not implemented now. With the current state of the bear market, a very lean team will be maintained going forward,” Huobi said in a statement, responding to queries from Reuters.

The statement confirmed an earlier message from Tron founder Justin Sun, who said that the “structural adjustment” in Huobi had not started yet but was expected to be completed by the end of the first quarter.

Sun said the company has 1,100 employees now.

Yesterday, crypto-focused bank Silvergate announced it was cutting 40% of its workforce, after being hit by a surge in withdrawals in the last quarter following the collapse of the FTX exchange.

Bet365 boss Denise Coates paid more than £260m in year to March

Jasper Jolly

The Bet365 boss Denise Coates was paid more than £260m in salary and dividends in the year to March 2022, underlining her place as one of the world’s highest-paid executives.

The best-paid Bet365 director, thought to be Coates, received remuneration of £213m for the year, about 15% lower than the £250m awarded in the previous year, according to the company accounts published on Friday.

As the company’s controlling shareholder she is also entitled to at least 50% of the £100m dividend for the year.

Coates’s latest package was a drop of about £35m compared with the previous year as the gambling company spent heavily on expansion.

Her extraordinary pay package regularly ranks among the biggest in Britain and beyond, and the latest is likely to put her among the very highest earners at a time when many in the UK are struggling with the rising cost of living. More here.

Inflation across the eurozone fell last month, and faster than expected, as energy prices fell back.

Consumer prices across the euro area rose by 9.2% in the year to December, down from the 10.1% recorded in November.

The drop was driven by lower energy prices – annual energy price inflation slowed to 25.7%, compared with 34.9% in November.

European gas prices fell back to their pre-Ukraine invasion levels last month, but are still sharply higher than two years ago.

Food, alcohol & tobacco prices rose, pushing its annual inflation rate up to 13.8%, from 13.6% in November. Non-energy industrial goods prices rose by 6.4%, up from 6.1% in November, while services inflation rose to 4.4%, from November’s 4.2%.

Core inflation, excluding volatile food and energy prices, rose to 6.9% from 6.6%, which may encourage the European Central Bank to continue hiking interest rates.

Bert Colijn, ING’s senior eurozone economist, predicts eurozone interest rates will be lifted at the ECB’s next two meetings:

The ECB has taken a very hawkish stance towards this development and has indicated that it will hike through a mild recession to bring inflation structurally down to 2%.

With energy inflation dropping quickly and energy supply forecasts improving, 2% could be reached much sooner than expected. Still, rising core inflation will be enough for the ECB to continue to hike by 50bp in February and March.

UK construction has joined other sectors of the UK economy by shrinking in December, points out the EY Item Club.

They warn that the near-term outlook is weak, which will hit housebuilding, saying:

Housing market activity looks to be correcting significantly, which is likely to weigh on house building. Cost pressures facing construction businesses have continued to ease but remain elevated by past standards. And still-high inflation and falling household real incomes are likely to discourage spending on home improvements.

However, energy-intensive construction is benefiting disproportionately from Government action to limit rises in businesses’ energy bills and should continue to be supported by the more targeted scheme which is expected to replace the current support in April. And as a relatively cyclical sector, construction businesses could be among the first to benefit when the economy begins to recover from its current challenges.

The UK factory sector shrank at the fastest pace since the early days of the pandemic, while activity in the services sector dipped slightly last month.

British construction activity fell in December at its sharpest rate since May 2020, as the building sector was hit by rising interest rates and cost pressures.

A closely-watched survey of construction firms has found that activity and new work declined at the quickest rates since May 2020 last month.

Faced with this downturn, construction firms cut jobs for first time since January 2021, and business confidence turned negative, according to the S&P Global/CIPS Purchasing Managers’ Index (PMI) for the construction sector.

This pulled the Construction PMI down to 48.8 in December from 50.4 in November, below the 50 level that separates growth from contraction.

The survey found that housing activity declined for the first time since last July, while civil engineering recorded a sixth consecutive monthly contraction in output. Commercial contruction kept growing, though.

Fears over the economic outlook knocked business confidence into negative territory for the first time since the initial Covid-19 wave in 2020.

Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply, warned that builders’ resilient spirits are being drained:

“The construction sector was stuck in the mud in December with the steepest fall in activity since the beginning of the pandemic in May 2020 and a similarly fast drop in pipelines of new work.

House building saw a notable change of direction, with a mix of higher inflation for raw materials and transportation and the squeeze on affordability rates for mortgages resulting in fewer house sales. The sector subsequently fell back into contraction for the first time since July. Civil engineering, responsible for larger projects, continued to be the weakest performer again, with a sixth month in the doldrums as uncertainty about the UK economy reared its ugly head again and customers hesitated.

Over in Germany, factory orders have dropped again as Europe’s largest economy struggles.

Manufacturing orders fell by 5.3% during November to the lowest level since July 2020, much worse than the 0.5% forecast by analysts, after a 0.6% rise in October.

Orders from eurozone countries fell by 10.3% on the month, as demand within Europe’s economy weakened, and were down 6.8% from outside the euro area. Orders from within Germany dipped by 1.1%

Statistics body Destatis says the drop was driven by weaker demand for heavy-duty machinery, and fewer major orders.

In the case of the manufacturers of capital goods, the order intake fell particularly sharply at -8.5% (excluding major orders -3.7%).

The decline in orders in mechanical engineering and other vehicle construction (e.g. rail vehicle construction and aircraft and spacecraft construction) played a large part in this development. Orders for manufacturers of intermediate goods fell by 0.9% and for consumer goods by 0.7%.

The average UK house price fell for the fourth month in a row in December, according to Halifax.

Property values decreased by 1.5% in December, after a 2.4% drop in November, a 0.4% decrease in October and a 0.1% dip in September.

The annual rate of house price growth more than halved, to 2% in December, from 4.6% in November.

This marked the lowest annual growth rate recorded since October 2019, when a 1.1% increase was recorded.

Across the UK the average house price in December was £281,272.

Kim Kinnaird of Halifax Mortgages said:

“As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market.

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