Market report

Wage growth stirs rates move | Begbies Traynor lifts divi


Wages continue to rise, fuelling fears that the Bank of England will maintain its aggressive interest rate increases to tame inflation.

Excluding bonuses, wages grew 7.3% in the three months to May, the fastest pace on record, but lower in real terms.

Adjusted for inflation, wages slumped by 1.2% for total pay and 0.8% for regular pay in the year to March to May.

Meanwhile, the rate of UK unemployment rose to 4% in the three months to May, up from 3.8% in the previous three months, the Office for National Statistics said.

The UK employment rate was estimated at 76%, 0.2 percentage points higher than the previous quarter but 0.6 percentage points lower than before the pandemic. The number of people actively looking for work also increased.

The prospect of higher interest rates saw sterling jump 0.4% to $1.29.

Matthew Percival, CBI director of people and skills, said: “The cause of record wage growth is contested, with some believing that it is caused by shortages and others that it is employers trying to help employees with the cost of living.

“But what will matter to the Bank of England when setting interest rates is that these increases are being funded by higher prices, not productivity. 

“Breaking this cycle requires action by government, not just higher interest rates. Steps like urgently completing the review of the Shortage Occupations List in the immigration system will ease the most acute shortages.

“An ambitious tax roadmap is also key to unlocking business investment in people, innovation and capital. Meanwhile, businesses must continue to focus on increasing flexible working to get more people into work.” 

Begbies Traynor

Insolvency specialist Begbies Traynor raised its dividend after its pretax profit increased by half in 2023.

Pretax profit climbed to £6m from £4m the year before, ahead of market expectations, leading the firm to up its dividend by 9% to 3.8p.

On an adjusted basis, which excluded the cost of acquisitions made during the year, pretax profit climbed to £20.7m from £17.8m. Revenue rose 11%.

During the year, Begbies has acquired property finance brokerage Mantra Capital and two chartered surveoyrs – Budworth Hardcastle and Mark Jenkinson & Co.

Post year end, Begbies snapped up another chartered surveyor, Banks, Long & Co, to strengthen its presence in Eastern England.

Market close

A rise in retail sales last month thanks to warmer weather improved sentiment towards JD Sports, which gained 3.5p, or 2.5%, to 144.5p and the Primark owner Associated British Foods, which advanced 40p, or 2%, to £20.50, while Next added 122p, or 1.8%, to 6812p.

Frasers Group has raised its stake in Curry’s from 10.4% to 11.1% as part of its “strategic investment” in the business. Shares in Currys increased by 1.5p, or 2.8 % to 51.25p on the news, while shares in Frasers were up 5p, or 0.7%, to 700.5p.

An easing of the dollar and new policy measures in China gave metal prices a boost, making mining stocks attractive. Fresnillo moved up 10p, or 1.7%, to 613.25p; Rio Tinto added 78.5p, or 1.6%, to 4947p; and Anglo American was 35p, or 1.6%, higher at 2229p.

Construction and civil engineering group Galliford Try said it expected pre-tax profits at the top end of consensus estimates. It lifted the construction group’s shares 15p, or 7.7% to a new record 210p.

The FTSE 100, held back by a rise in sterling, edged up just 8.73 points, or 0.1%, to 7,282.52.

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