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Business - Need to Know

Afternoon Edition

Good afternoon. It is a great day for the high street after figures showed that British retail sales growth surged in May and expectations for sales next month hit their highest level in more than 26 years.

The latest distributive trades survey from the Confederation of British Industry shows that the retail sales balance rose to +51 in May, far surpassing economists' expectations for +17, and up sharply from +12 in April. The measure of expected sales for June rose to +58, the highest reading since September 1988, and up from +40 in May.

Rain Newton-Smith, director of economics at the CBI, said the low inflation, which slipped into deflationary territory last week for the first time since 1960 when Lonnie Donegan was at No 1 with My Old Man's a Dustman, had given household incomes a “much-needed boost and greater spending”. Kathryn Hopkins, our Economics Correspondent, has the details here.

Meanwhile, the rate at which the UK government can tackle the deficit could be “somewhat slower” than George Osborne has targeted, according to Moody's.

The credit ratings agency says most of the "low-hanging fruit" in the public finances has already been picked, “including in terms of efficiency savings and reducing tax evasion”. There’s more on the Business Now live blog.

Meanwhile, Tom Hayes, a former star trader at UBS and Citigroup, today became the first person to face trial by jury over allegations he conspired to rig global Libor interest rates. The former yen derivatives trader is charged with eight counts of conspiracy to defraud between 2006 and 2010, a criminal offence that carries a maximum jail sentence of 10 years. He has pleaded not guilty. The trial at London's Southwark Crown Court is expected to last 10-12 weeks.

On the corporate front, we will get results from Tata, the parent company of Jaguar Land Rover, later. Expectation is that they could disappoint due to sluggish sales at its JLR unit in China.

In the US, we get figures for durable goods for April and consumer confidence for May at 1.30pm BST. Follow the live blog, which now pops out, for the latest.

Finally, you can also listen to this week’s Business podcast where Andrew Clark, deputy business editor, Philip Aldrick, our economics editor, and Kathryn Hopkins discuss this week’s Queen’s Speech and the G7 summit. Click here to listen.

Don't forget you can also follow me on Twitter for regular updates throughout the day - @becclancy.

Have a great day.

Rebecca Clancy
Breaking News Editor, Business
The Times
rebecca.clancy@thetimes.co.uk

London’s leading index has started the post-bank holiday week on the backfoot, down 15.19 points to 7,016.53, amid anti-austerity party local election gains in Spain and renewed concerns of a Greece default.

Oil stocks are lower on weakening Brent crude, down below $66 a barrel, and sector research from JP Morgan, which has cut the price target of Tullow Oil, 4 per cent lower to 398½p, the biggest faller on the FTSE 250.

Back with the FTSE 100, and Royal Mail has gained 3 per cent to 518½p after an upgrade from Cantor Fitzgerald, and the airlines are flying higher on the back of strong annual profit growth from Ryanair, 6.5 per cent higher to €11.63.

Alex Ralph
Market Reporter

Children are taking their first trip abroad at an ever younger age, according to research from Sainsbury's Travel Insurance.

There is no real corporate news to look out for in the US today, but plenty on the economic front to digest.

First up we get durable goods data for April which is expected to show a 0.3 per cent rise in consumer spending, unchanged from the revised March number. However, business investment spending plans are expected to fall 0.2 per cent in the month.

We also get May's consumer confidence numbers at 1.30pm BST, which is expected to slip back slightly to 95 from 95.2.

At 2pm, the Federal Housing Finance Agency releases its home price index for March. The S&P/Case Shiller composite index of 20 metropolitan areas is expected to have gained 4.8 per cent in March after it increased 5 per cent in February on an annual basis, according to Thomson Reuters.

Meanwhile, new home sales data is expected to show sales increased to an adjusted annual rate of 510,000 units in April from 481,000 units in March.

Finally, at 2.45pm, we get the flash PMI services data, which is expected to have slowed slightly to 57 in May, from 57.4 the previous. That still indicates strong growth, however, above the 50 mark that separates contraction from expansion.

Markets: Futures suggest a negative start to the day on Wall Street. The Dow Jones is expected to open down 14 points at 18,210, the S&P to fall 3.5 points to 2,121, and the Nasdaq to drop 8.75 points to 4,520.

Rebecca Clancy

“Overall the outlook is bright for firms on the high street, but challenges still remain, especially for food retailers, who are still feeling the heat of stiff price competition from new entrants to the sector. And investment plans have also taken a hit.”
Rain Newton-Smith, CBI director of economics, on the strong growth in retail sales volumes
Today's FTSE 100 risers and fallers
Up (%)
Weir Group 3.51
Royal Mail 2.97
Taylor Wimpey 1.73
Barrett Developments 1.51
BT Group 1.34
* As at noon
Down (%)
Intertek Group -1.71
Centrica -1.64
WM Morrison Supermarkets -1.55
Randgold Resources -1.44
Hikma Pharmaceuticals -1.40
* As at noon
The Markets Today
FTSE 100 7,016.53 -0.22%
FTSE 250 18,176.99 -0.09%
Cac 5,130.95 0.27%
Dax 11,760.15 -0.46%
Brent Crude 65.66 -0.62%
Gold 1,194.90 -0.78%
GBP/US 1.5410 -0.36%
GBP/euro 1.4130 0.30%
10Y Gilt 127.693 0.34%
* As at noon
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