BUSINESS LIVE: Wage growth slows; Persimmon profits slump; CMA flags vet sector concerns

Domino’s Pizza Group has upped profit forecasts for 2024 after easing raw material profits helped earnings tick higher last year.

The London-listed company, a franchisee of US-based Domino’s Pizza Inc, is targeting £2billion in system sales by 2028, as it increases its stores to 1,600 by 2028 and £2.5billion of sales by 2033 from 2,000 stores.

The group, which has about 1,319 stores in the UK and Ireland, posted system sales of £1.5billion for the full year to 31 December

The company had earlier raised prices to keep up with the high costs of raw materials, but as costs have started to ease the company has had to grapple with lower deliveries, as customers turn more cautious on their spending amid a cost of living crisis.

It posted a 3.6 per cent rise in its underlying core profit to £138.1million.

Thomas Pugh, economist at RSM UK:

‘With the unemployment rate still low at 3.9% and pay growth sitting at 5.6%, most Monetary Policy Committee (MPC) members won’t see a reason to rush towards cutting interest rates at its meeting next week.

‘That said, wage growth is slowing much more quickly than the headline figure suggests and inflation will soon be back below 2%. That will set the stage for a first rate cut in the summer and for interest rates to end the year at 4.5%.

‘Admittedly, there are still concerns about the quality of the employment data. Indeed, the ONS has not yet re-endorsed the new data as official statistics and warns users to take care when using them. But there is plenty of evidence that the labour market is easing. The number of people in employment dropped by 21,000 on the quarter to January and the number of payrolled employees rose by just 20,000 in February.

‘More important for the inflation outlook are the pay figures. Private sector wage growth excluding bonuses, the measure most reflective of underlying pay pressures, slowed from 6.2% to 6.1%. And the 3m/3m annualised measure, which is a better indicator of current pay pressures, was a little over 3%, about half the headline rate.

‘Just as importantly for households, real wages grew by 1.4%. That, combined with tax cuts coming in April and rising consumer confidence should give a boost to consumer spending in the second half of this year, helping a consumer spending driven economic recovery. Indeed, we expect the economy to materially improve from the summer onwards.

‘Overall, even though pay growth is still double the 3% – 3.5% that the MPC thinks is consistent with 2% inflation, there are clear signs that monetary policy will soon need to become more accommodative.

‘Pay growth is slowing and inflation is falling more quickly than expected so it probably won’t be long before rate cuts are on the table even if the unemployment rate remains stubbornly low.’

Artificial Intelligence tools are not saving workers any time and have become as unpopular as the commute to the office, a survey has suggested.

A poll found that for 52 per cent of employees who use the technology, it either does not save them time or adds more time to their work.

The findings contradict hopes that AI will deliver a big boost to productivity that can help lift the economy out of stagnation.

Britain’s competition watchdog has ‘provisionally’ decided to launch a formal market investigation into the veterinary sector after an initial review raised multiple concerns.

The Competition and Markets Authority’s concerns include weak competition, lack of information for consumers to choose the best veterinary practice and pet owners potentially overpaying for medicines.

Persimmon expects market conditions to remain subdued throughout this year, with the near-term outlook ‘uncertain’, after the housebuilder reported a profit slump of around 52 per cent.

The FTSE 250 firm’s pre-tax profit came in at £351.8million for the 12 months to 31 December, below market expectations of £359.5million.

Group CEO Dean Finch said:

‘The Group successfully navigated the challenging market conditions in 2023. Completions were ahead of expectations, margins were industry-leading, we maintained our strong balance sheet and we continued to deliver further improvements in our product quality and service.

‘Although the near-term outlook remains uncertain, the significant pent-up demand for homes remains unchanged. Customers want quality homes in the places where they want to live and work, and affordability is crucial.

‘During the year we have continued to take further steps to strengthen the business and we are well placed to meet this demand through our three excellent brands offering different price ranges with overall private average selling prices that are below the market average.

‘The investments and operational changes that we have made in the past few years mean that we are trusted by our customers to deliver consistently high-quality homes.’

Japan could be on the verge of raising interest rates out of negative territory after revised figures showed the country narrowly avoided recession.

The economy grew by 0.1 per cent in the fourth quarter, compared with an initial reading of a fall of 0.1 per cent.

That could give the Bank of Japan leeway to raise interest rates for the first time since 2007 when it holds its policy meeting next week.

UK wages before bonuses slowed to a slightly weaker than expected 6.1 per cent in the three months to 31 January as, the unemployment rate rose more than forecast to 3.9 per cent, fresh data from the Office for National Statistics shows.