US inflation gauge hits lowest level in nearly three years

Chosen by us to get you up to speed at a glance
US consumer prices increased at their slowest rate in nearly three years, according to the Federal Reserve’s preferred measure of inflation, keeping a June interest rate cut for America on the table.
The personal consumption expenditures (PCE) price index rose by 2.4pc in January, the Commerce Department’s Bureau of Economic Analysis said, in the smallest year-on-year increase since February 2021.
It followed a 2.6pc advance in December.
Bond markets rallied after the news, with UK gilt yields having earlier hit a three-month highs amid worries over European inflation.
Yields, the return the Government promises to pay buyers of its debt, which moves inversely to prices, have fallen across the Continent after the US data.
RSM US chief economist Joseph Brusuelas said the PCE figures showed “sustained goods deflation” in America.
Read the latest updates below.
Thanks for joining us today. Chris Price will be back in the morning head of the London Stock Exchange opening with the latest business news. In the meantime, here are a few of our latest stories from elsewhere on The Telegraph website:
Revenue at private hospital chain Spire Healthcare jumped 13.4pc last year to £1.4bn as patients fled waiting lists at NHS hospitals.
The group, which started life as the hospitals division of Bupa insurance, experienced 9.5pc growth in its revenue from private patients, while the value of services delivered on behalf of the NHS rose 15.5pc.
Spire said that it had benefited from increasing numbers of patients choosing its hospitals through the NHS booking systems, and from helping local NHS trusts with their backlogs.
It said 58pc of its NHS-funded patients had orthopaedic problems, highly sought after by private hospitals because the treatments, including hip and knee replacements, usually have good margins.
Profits, however, remained wafer thin at £27.9m, despite rising 240pc.
Video game maker Electronic Arts is to cut around 5pc of its workforce, or approximately 670 employees, as redundancies in the technology and gaming sector continue after a surge of hiring in recent years.
The company, which makes games such as Star Wars Jedi: Survivor, expects to incur up to $165m (£131m) in charges related to the move, which will also involve cutting office space.
It said that there has been a rapid shift in the type of games customers are playing towards “open world” ones giving players a lot of choices, which means it is now axing some of the titles it had under development
The announcement comes just days after Sony said that it would cut about 900 jobs in its PlayStation division, or about 8pc of its global workforce.
Profits at Schroders fell last year because of “headwinds in the markets and adverse foreign exchange rates”, the City investment manager said yesterday [Thursday].
Although assets under management rose nearly 2pc to £737.5bn, profits fell 17pc to £402.6m, including restructuring costs of £86.2m.
The company has been trying to bulk up its wealth management division, which it described as delivering “standout performance” with growth of 8pc, along with an investment consultancy business and the investments it offers that are not traded on public markets.Schroders boss Peter Harrison told the FT:
We needed some new capabilities and took out a layer of costs. Despite there being pressure in the traditional asset management world from cash and passive [investing], growth in those other areas is far more predictable.
The Treasury has blocked plans by Steve Barclay, the Environment Secretary, to crack down on dividends from water companies, according to a report.
Mr Barclay told industry executives last month that big sewage discharges could be punished with bans on dividends and bonuses.
However, according to Bloomberg, Gareth Davies, Exchequer Secretary to the Treasury, has written to water industry representatives saying: “The Government has no plans to block water company dividends over illegal pollution events.”
Ofwat will nonetheless receive new powers from next year to block dividends if they could put a company’s financial health at risk, Mr Davies said in the letter, seen by Bloomberg.
Man Group profits have tumbled after some of the hedge fund’s automated trading algorithms were wrongfooted by last year’s market turmoil, writes Michael Bow:
Pre-tax profits at the world’s largest listed hedge fund fell 60pc from $745m (£589m) to $279m last year after a substantial slide in performance fees, which the hedge fund earns from clients when its investments beat certain benchmarks.
Some of Man’s absolute return funds, which had made big gains in 2022, failed to deliver similar profits last year amid choppy market conditions.
Markets were roiled by the collapse of Silicon Valley Bank and the rescue of Credit Suisse last year, which dampened performance across the hedge fund industry.
Man Group employs computer-driven trading strategies that follow market trends. These “quant funds” struggled to adapt to the rapid changes in market conditions.
That led to lower returns and performance fees sliding 77pc to $180m as a result.
However, shares rose 2pc after the company unveiled a $50m buyback.
Analysts at Citigroup called the numbers a “resilient set of results”.
Man chief executive Robyn Grew said: “Despite some strategies being softer in their performance, we still put $180m of performance fees back into the organisation and that’s a reflection of high quality return on long-only and alternative content [investment strategies] that sits across the organisation.”
The FTSE 100 was up 0.07pc today. The biggest riser was kitchen supplier Howden Joinery, up 7.04pc, followed by Sensodyne maker Haleon, up 5.57pc. Whitbread, the owner of Premier Inn, was the biggest faller, down 4.57pc, followed by British Airways owner IAG, down 3.63pc.
Meanwhile, the FTSE 250 rose 0.22pc. The biggest riser was Hunting, a supplier to the oil and gas industry, up 11.50pc, followed by energy producer Drax, up 11.17pc. The biggest faller was Plus500, down 5.97pc, followed by Aston Martin, down 5.83pc.
Consumer credit jumped last month. Kathleen Brooks, research director at broker XTB, says that the growth in borrowing was unexpected:
Consumer credit was stronger than expected last month, and rose by £1.9bn, faster than the £1.5bn expected. Excluding last November, when consumer credit surged by £2.09bn, this is the largest monthly increase since 2017. Nearly half of the consumer credit increase was due to rising levels of credit card debt, which may be a sign of consumer confidence to take on more debt. The annual growth rate for consumer credit was 8.9pc, the highest growth rate since 2018.
The UK’s consumer borrowing habits seem to be back to their pre-covid norms, suggesting that as pandemic era savings get run down, people are turning to credit to maintain spending levels …
A rise in household debt is not necessarily a problem, and it can boost economic growth, however, it does give rise to concerns about delinquency rates.
Data released today by the Home Office shows that Britain granted 337,240 work visas in 2023, 26pc higher than in 2022, driven almost entirely by a 91pc jump in health and care sector visas.
Of the 146,477 visas in that sector, just over 60pc were for workers in residential care homes and those providing care in people’s own homes.
Many workers also brought dependants, with the health and care bracket accounting for 73pc of the 279,131 visas given to the family members of workers.
The latest figures follow statistics in November showing annual net migration to the UK hit a record 745,000 in 2022.
As part of his effort to bring numbers down, Rishi Sunak’s administration tightened visa rules, introducing higher salary thresholds and curbs on care workers bringing in family members.
A Savile Row tailor to stars from Sir Elton John to Stormzy has opened a new bespoke £2m store, as its boss said the luxury menswear market is in a “bubble” which is more cushioned from the wider cost-of-living squeeze.
The third Richard James store has opened in Clifford Street, just off Savile Row.
“We are slightly sheltered from what is going on in the rest of the country,” Mr Dixon said, despite UK inflation hitting double digits a year ago.
“But we are not completely immune, there is a knock-on effect. Whenever there is a bad news story about the economy, I do see an effect here.”
Higher interest rates, which have pushed up mortgage costs, are more likely to affect its customers, but he said he had “not noticed any decreases” in spending.
Mr Dixon joined rival luxury retailers in criticising the so-called tourist tax in the UK.
The Government scrapped VAT-free shopping for tourists a few years ago, a move which particularly affected luxury retailers who rely on affluent tourists.
“It puts us at a completely unfair disadvantage compared to those with stores in Paris or Milan … if you don’t have stores all over Europe, you miss out,” he said.
Reinstating tax-free shopping for tourists is among the measures that business groups are calling on the Chancellor to consider in his spring Budget next week.
US President Joe Biden has announced an investigation into the national security risks posed by Chinese tech in cars, warning they could be used to collect sensitive data.
He has ordered the US Commerce Department to conduct the probe, focusing on vehicles containing tech from “countries of concern” such as China, and to respond to threats.
Mr Biden said: “China is determined to dominate the future of the auto market, including by using unfair practices.”
The US government has been working to lower the US car industry’s reliance on China, offering tax breaks for American made electric vehicles and batteries, while trying to build up its domestic production capacity.
The White House said connected vehicles collect vast amounts of data on drivers and passengers, log information on US infrastructure through cameras and sensors, and can be piloted or disabled remotely.
In January, Tesla boss Elon Musk said Chinese car companies were “the most competitive” globally.
“If there are not trade barriers established, they will pretty much demolish most other car companies in the world,” he said.
This morning we reported that mortgage approvals in Britain reached the highest level in more than a year suggesting the property market slump could be over. Tim Wallace, our senior economics correspondent, has more:
Traders in financial markets expect the Bank of England’s policymakers will cut the base rate from 5.25pc in the coming months. This expectation affects banks’ funding costs in financial markets, allowing them to cut the rates offered on mortgages even though the Bank of England has not changed its policy rate yet.
However, there are still signs of last year’s slump in mortgage approvals in the lending data.
Households repaid a net £1.1bn of mortgage debt in January. Mortgage debts totalled £1.62 trillion, down 0.2pc on the year – the first annual drop since the Bank’s records began 30 years ago.
Martin Beck, chief economic adviser to the EY Item Club, said the market remains under pressure from borrowing costs.
“Mortgage approvals in January were still a tenth below the 2022 average, reflecting the fact that while mortgage affordability has improved in recent months, it’s still very stretched relative to past norms. While the average interest rate on new mortgages dipped in January, it was still over 3.5 percentage points higher than the lows of 2021,” he said.
“There’s already evidence that quoted mortgage rates are rising in response to investors reining back expectations of the scale of Bank of England rate cuts this year. This is likely to continue over the next few months. None the less, an improving macroeconomic climate, with cost-of-living pressures easing and monetary policy likely to be loosened soon, should support a further recovery in mortgage demand.”
Samuel Tombs at Pantheon Macroeconomics said it suggests the outlook for spending “continues to brighten” after the fall into recession at the end of last year.
“Households have started this year better than they ended 2023, with reviving consumer credit flows supporting January’s rebound in retail sales,” he said. 
Sainsbury’s is planning to cut jobs to free up cash to spend on luring shoppers back from rivals. Our retail editor Hannah Boland has the details:
Sainsbury’s is poised to axe 1,500 jobs as it forges ahead with plans to cut £1bn in costs.
A simplifying of operations will lead to roles being cut across the supermarket chain’s bakeries, warehouses and call centres, as well as in HR.
This forms part of efforts by Sainsbury’s to free up cash as it tries to lure shoppers back from rivals.
Around 1,500 roles are expected to be lost, although Sainsbury’s said these plans were still subject to consultation.
The job losses come after chief executive Simon Roberts revealed the company’s new strategy earlier this month, during which he refused to rule out redundancies.
Sainsbury’s has said it wants to strip £1bn in costs out of the business, on top of the £1.3bn already taken out in the three years to March 2024.
Continue to read the full story…
I’ll pass you over at this point to Alex Singleton, who will post all the latest updates here.
As US inflation comes into focus, I’ll leave you with this image of traffic entering and exiting mid-town Manhattan via the Queensboro Bridge.
New York is close to implementing a plan that would use license-plate readers to turn the whole of the area of Manhattan south of Central Park into one giant toll zone.
The pound has risen against the dollar amid hopes the Federal Reserve may yet cut interest rates in the first half of the year amid declining inflation.
Sterling has risen 0.2pc towards $1.27 after the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, climbed 2.4pc in January, which was in line with estimates and down from 2.6pc in December.
However, the pound is still set for a small monthly decline against both the dollar and the euro.
Peter Andersen, founder of Andersen Capital Management in Boston, said the US data “should buoy investors’ optimism that the economy is on strong footing … the Fed has done a very substantial job in controlling inflation and if we are not currently enjoying a soft landing, it is soon to come”.
 Lee Hardman senior FX strategist at MUFG, said: “The pound has been consolidating at higher levels this month after strengthening in January.”
France’s demands for UK taxpayers to help fund Hinkley Point C are “wholly unacceptable”, according to the former energy secretary who helped develop the nuclear project.
Our energy editor Jonathan Leake has the details:
Chris Huhne, who was energy secretary from 2010 to 2012, said he was “astonished and saddened” to hear that both Bruno Le Maire, the French finance minister, and Luc Rémont, chief executive of EDF, were pressing the UK to help with the cost overruns.
Mr Huhne was a leading architect of the deal with EDF, France’s state-owned electricity supplier, to build the nuclear power station.
Under the deal, finally signed off by Mr Huhne’s successor, Ed Davey, EDF was responsible for all the estimated £18bn costs,with a start date of 2025.
Read how costs have risen.
Wall Street’s main indexes opened higher as a key inflation metric came in line with estimates, raising hopes of interest rate cuts by the US Federal Reserve in the first half of the year.
The Dow Jones Industrial Average rose 64.73 points, or 0.2pc, at the open to 39,013.75.
The S&P 500 opened higher by 15.60 points, or 0.3pc, at 5,085.36, while the Nasdaq Composite gained 111.60 points, or 0.7pc, to 16,059.34 at the opening bell.
US interest rates have reached their most restrictive levels since 2007 after the Federal Reserve’s preferred measure of inflation fell to its lowest level in three years.
The gap has increased between the core personal consumption expenditures (PCE) price index – which measured at 2.8pc in January – and US interest rates, which sit at between 5.5pc and 5.25pc.
This chart from Charlie Bilello, chief market strategist at Creative Planning, shows it is the widest gap in 17 years:
The Fed’s preferred measure of inflation (Core PCE) moved down to 2.8% in January, the lowest since March 2021. The Fed Funds Rate is now 2.4% above Core PCE, the most restrictive monetary policy we’ve seen since September 2007. pic.twitter.com/qurMS3b9Vv
US prices increased at the slowest rate in nearly three years, keeping a June interest rate cut from the Federal Reserve on the table.
The personal consumption expenditures (PCE) price index rose by 2.4pc in January, the Commerce Department’s Bureau of Economic Analysis said, in the smallest year-on-year increase since February 2021.
It followed a 2.6pc advance in December.
RSM US chief economist Joseph Brusuelas said it showed “sustained goods deflation”:
US January PCE Inflation: sustained goods deflation is the big story here. Down 0.5% Y/Y with durables down 2.4% Y/Y. Services up 3.9% in contrast with the 5.1% posted last June. Food up 1.4%, energy down 4.9% and non durables up 0.5%.
US 10-year moves down after that constructive & encouraging PCE income, spending & inflation data. The trading community got caught offside on that data this morning. Too many bought into the talking points on inflation rather than focusing on the fundamental goods deflation that… pic.twitter.com/DfROxcutqH
The US Federal Reserve’s preferred measure of inflation has come in as markets expected in a relief to Wall Street and the City.
A Commerce Department report showed the personal consumption expenditures (PCE) price index, considered to be the Fed’s preferred inflation gauge, measured at 2.4pc in January, down from 2.6pc the previous month.
The core PCE index, excluding food and energy, stood at 2.8pc, down from 2.9pc in December.
After the data was published, the S&P 500 and Nasdaq futures erased losses and rose in premarket trading.
The Dow Jones Industrial Average was down 25 points, or 0.1pc, while the S&P 500 was up 4.75 points, or 0.1pc, and Nasdaq 100 futures were up 43 points, or 0.2pc.
🇺🇸Consumers take a breather while #inflation cools “with bumpiness” in January✅Spending +0.2% 🔻Inflation-adj -0.1%💵Disposable income +0.3% ↔️Inflation-adj +0% 🏦Savings rate low 3.8% (+0.1pt)⚠️📉PCE #inflation 👏Headline: 2.4% y/y (-0.2pt) 👏Core: 2.8% y/y (-0.1pt) pic.twitter.com/4EVxD035XQ
Kitchen supplier Howdens has jumped to the top of the FTSE 100 as it shrugged off higher costs to secure more market share.
The wholesaler’s shares have gained 8pc today and are up 70pc over the last five years as it maintained gross margins broadly at 60.8pc despite increasing costs.
Revenue has remained close to last year’s record performance at £2.3bn, which is 45pc higher than before the pandemic, which triggered a home improvements boom. Pre-tax profits grew by a quarter last year to £327.6m.
Chief executive Andrew Livingston said: “The combination of a strong product line-up, high stock availability and outstanding customer service, alongside investments to drive future growth, all contributed to further market share gains in 2023.”
Numis analyst Christen Hjorth said Howdens had enjoyed “another year of market outperformance”.
German inflation slowed by more than expected in February to 2.5pc from 2.9pc the previous month.
The consumer prices index in Europe’s largest economy is now at its lowest level since June 2021, according to preliminary data from federal statistics agency Destatis.
The fall was driven by energy prices, which were 2.4pc lower than in the same month of the previous year. 
A growing boycott of Bud Light over its partnership with a transgender influencer has hurt sales at parent group AB InBev.
Our senior business reporter Daniel Woolfson has the details:
AB InBev, which owns Bud Light, Stella Artois, Budweiser and Corona, said that sales to retailers in the US fell by 17.4pc in the last quarter of 2023, which it blamed primarily on the decline of Bud Light.
The slump is deeper than the 16.6pc fall seen in the third quarter of last year and means AB InBev has now suffered three consecutive quarters of double-digit percentage sales falls in the US.
Formerly the US’s best selling beer brand, Bud Light angered American conservatives last year after a marketing tie-up with transgender influencer Dylan Mulvaney in April.
Bud Light sent the 26 year-old a personalised beer can to celebrate her first year since transitioning gender.   
Read how it sparked boycotts.
Bond markets are having an off day and some economists think traders are wrong to be pushing up their expectations for interest rates.
 Ashley Webb and Joe Maher of Capital Economics said:
Despite renewed inflation concerns pushing interest rate expectations and gilt yields higher, our forecast that CPI inflation will fall below 1pc later this year makes us think that the markets are wrong to price in interest rates falling from 5.25pc now to only 4pc by the end of next year. 
We think rates will fall to 3pc, although the risk is that the Bank of England starts cutting rates later than our forecast of June.
The Body Shop is to shut 75 more stores within the next six weeks with 489 job losses, administrators have said.
Last week, it was revealed that it would close just under 100 of its 198 stores, including its flagship Oxford Street store, in an attempt to “re-energise” the retail chain and secure its future.
Taxpayers will be forced to pay millions of pounds to sacked staff at The Body Shop as administrators oversee a drastic restructuring of the collapsed chain.
Tony Wright, joint administrator, said: 
In taking swift action to right-size The Body Shop UK store portfolio, we have stabilised the business and are providing the best opportunity for this iconic brand to have a long-term, sustainable future.
The UK business continues to trade in administration, and we remain fully focused on exploring all options to take the business forward.
Mike Ashley has arrived for the latest day of the trial brought by his Frasers retail empire against Morgan Stanley, which is accused of “snobbery” for the way it threatened to cancel his €220m bets on Hugo Boss.
Our reporter Adam Mawardi is at the High Court:
Lawyers for Frasers are questioning Simon Smith,  joint global head of investment banking at Morgan Stanley, over reports that he had a “visceral reaction” to Mike Ashley becoming a client of the bank
Mr Smith in his witness statement said he had “reputational and regulatory concerns” about the bank getting close to Mr Ashley’s team.
He said: “If we entered a corporate broking or advisory relationship with Frasers, we would be  aligning the Morgan Stanley brand with the brand of Frasers/Mr Ashley.”
On his previous comments that ‘“I don’t like Mike Ashley”, Mr Smith said this was not a personal view about the retail billionaire, but rather it was “shorthand” for “I don’t like the idea of doing business with Mike Ashley”.
He said: “As I said at the time, I thought Mr Ashley was a very talented retailer and a self-made billionaire who was entitled to respect. 
“The question for me to consider is whether to attach the firm’s brand to someone who is as controversial and high profile as Mr Ashley.”
Oil is on track to make a second consecutive monthly gain amid speculation the Opec+ cartel of oil producers will extend supply cuts and the market will gradually tighten.
Global benchmark Brent traded down 0.4pc near $83 a barrel, although it is up more than 2pc in February, while West Texas Intermediate was down 0.4pc towards $78. 
Oil’s back-to-back monthly advance has been supported by supply cuts from Opec and its allies, and the group is widely expected to prolong the reductions into the second quarter. 
Tensions in the Middle East, including disruptions to Red Sea shipping, have also buoyed crude.
Trafigura chief economist Saad Rahim said the market “does feel relatively tight,” pointing to “signs of life” in global manufacturing and petrochemicals and strong fuel demand in Asia. 
He said: “You’re hearing the phrase ‘upside risk’ a lot more than you have in the past couple of years.”
The rise in UK Government borrowing costs today is the sharpest in Europe – and the incoming Deputy Governor of the Bank of England may have played a small part in that.
Bond market yields are rising across Europe as inflation figures in its major economies come in higher than predictions a few months ago.
The yield on 10-year UK gilts has risen at the fastest pace among its European peers – and the difference may have something to do with the Bank of England’s incoming policymaker.
Panmure Gordon chief economist Simon French flagged that the newly appointed Deputy Governor of the Bank of England is a “hawkish” appointment, indicating she is more likely to lean towards keeping interest rates higher for longer in the battle against inflation.
Expectations of higher interest rates typically send bond yields higher as investors wait to see if they can get better returns later.
Quite a hawkish appointment given Lombardelli was a well-known inflation hawk within HMT in 2021/22 when transitory debate raged. At the margin (and only at the margin) this reduces the chances of a rapid BoE easing cycle. https://t.co/6b2b4GAjHZ
The cost of Government borrowing has hit a three-month high after inflation figures from Germany, France and Spain remained more persistent than markets had hoped.
The yield on benchmark UK gilts has risen by seven basis points to 4.25pc, with Italy’s 10-year bond yield up more than six basis points to 3.94pc and Germany’s 10-year bund yield up four basis points to 2.5pc.
It came as Spanish inflation fell slightly less than expected to 2.9pc, while French prices rose at an annual pace of 3.1pc in January, down from 3.4pc the previous month.
Annual inflation slowed in six economically important German states in February, suggesting that the national figure released later will continue its downward trajectory.
However, the data are unlikely to prompt the European Central Bank to cut interest rates in March or April.
Anders Svendsen, chief analyst at Nordea, said: 
Inflation is still a little bit higher than everybody would have expected a few months ago.
If you look at the January numbers, the monthly increases were quite high and if that’s the case again in February it will challenge the narrative of gradually falling inflation.
Bitcoin remains on track for its biggest monthly gain in more than three years and is within sight of a record high, propelled by cash rushing into so-called exchange-traded funds.
The approval and launch of the wider trading methods, known as ETFs, in the US this year has opened the asset class to new investors and reignited the excitement that evaporated when prices collapsed in the “crypto winter” of 2022.
The largest cryptocurrency by market capitalisation was last up 3.4pc at $62,205, having changed hands at $63,933 overnight, the highest since late 2021.
Bitcoin’s monthly gain is more than 47pc, its largest since December 2020, and its rally has pulled fellow cryptocurrency ether along in its wake. 
The smaller token topped $3,500 for the first time since April 2022 on Wednesday and was last up 4.3pc at $3,466, taking its February increase to 52pc.
Tony Sycamore, an analyst at brokerage IG, said the momentum in bitcoin suggested “a test and likely break” of $69,000, which would put bitcoin beyond its record high set in the heady days of crypto peaks in November 2021.
Matt Simpson, senior market analyst at City Index, said: 
If this were any other market, it would likely be in the ‘blow-off top – don’t go near that bubble’ category. 
But bitcoin is back in its parabolic-rally phase, with no immediate signs of a top.
Women will make up the majority of decision makers on interest rates for the first time at the Bank of England after the Chancellor announced its next deputy governor.
Clare Lombardelli, who is the chief economist at the OECD and a former chief economic advisor to the Treasury, will succeed Ben Broadbent as the next Deputy Governor for Monetary Policy from July.
It will mean that for the first time there will be five women on the nine-person Monetary Policy Committee which sets interest rates.
Ms Lombardelli will also lead the actions in response to former US Federal Reserve chairman Ben Bernanke’s review of the Bank’s forecasting process.
Chancellor Jeremy Hunt said: “Clare brings significant experience to the role tackling financial and economic issues both domestically and internationally.”
Mr Broadbent is stepping down after becoming Deputy Governor in 2014. Governor Andrew Bailey said:
Clare’s impressive career means she brings a huge amount of relevant experience and expertise to the Monetary Policy Committee, and the Bank more broadly, at a time of great importance for the UK economy.
I would also like to thank Ben Broadbent for his service. He will be missed, and all at the Bank wish him the very best for the future.
The mortgage market is still unlikely to recover to its pre-pandemic levels before the end of the year as lenders anticipate interest rates will remain high for longer than previously expected.
Ashley Webb, UK economist at consultancy Capital Economics, said: 
January’s money and credit figures suggest the drag on consumer spending and the housing market from higher interest rates is easing, which suggests an economic recovery, at least in some sectors, has already begun.
The jump in mortgage approvals for house purchase, from 51,506 in December to 55,227 in January (consensus forecast 52,000), took them to the highest level since October 2022, before the spike in mortgage rates following the “mini” budget caused lending to slump. 
However, increasing interest rate expectations will mean the fall in mortgage rates will now pause, and could partially reverse. 
Therefore, a full recovery to 65,000 approvals a month – the norm before the pandemic – is unlikely before the end of the year.
Credit and property analysts believe the increase in mortgage approvals is a sign the housing market is finding a new normal after a period of increasing borrowing costs.
Kate Steere, housing expert at finder.com said: 
Mortgage approvals have risen for a third month in a row, suggesting that more buyers are starting to accept that the current mortgage rates on offer may well be the new normal.
We faced some tumultuous times in December with inflation figures unexpectedly rising and holding steady at the same rate in January, so it’s great to see that buyer confidence hasn’t been knocked.
Aaron Milburn of credit intelligence provider Pepper Advantage said: 
Signals that interest rates may have reached their peak have been reflected in a jump in January mortgage approvals. 
The Bank of England has clearly set a path to lower rates as inflation shows signs of steady decline, a move that has breathed new life into the mortgage market as banks pre-emptively lower their fixed-term rates to entice buyers. 
These moves appear to be paying off after a period of relative stagnation as banks tap into strong mortgage demand.
The number of mortgage approvals in Britain reached the highest level in more than a year in a sign the property market slump is over.
There were 55,227 mortgages given the green light in January, up from 51,506 in December, according to the Bank of England.
The figure was the highest since October 2022, when interest rates still stood at 2.25pc.
Since then, the Bank of England has raised borrowing costs to 5.25pc as it fights to bring down inflation, in turn making mortgages less affordable.
The average five-year fixed residential mortgage rate stands at 5.33pc, compared to more than 6pc last summer, according to Moneyfacts.
US logistics giant GXO has gatecrashed the takeover of Britain’s last independent haulier with a higher £762m bid, gazumping an offer from a French rival.
Our reporter Michael Bow has the latest:
GXO has made a formal cash offer of 605p for Wincanton, which transports groceries for Sainsbury’s and Morrisons.
The bid is above the 480p put forward by CMA CGM, a French group controlled by the family of billionaire Rodolphe Saadé.
GXO, which is listed on the US stock exchange and is worth $6.3bn (£4.9bn), previously took another UK stock market listed group, Clipper Logistics, private in 2022.
The US group has won the support of Wincanton’s largest shareholders, Aberforth Partners, Threadneedle, Wellcome Trust and Polar Capital. They had previously backed the CMA CGM offer. 
Wincanton has yet to comment on the bid. The board had recommended the CMA CGM offer after it bumped its bid earlier in the week, adding an additional 30p to the offer, which valued Wincanton at £605m  
GXO said it “knows Wincanton well and is impressed by its position as a logistics partner of choice for UK and Irish businesses”.
The pound rose slightly against the dollar as investors wait to see what key US inflation figures will show later today. 
Sterling was last up 0.1pc to $1.26 but looks on track to end the month slightly lower versus the American currency.
Investors are awaiting the release of the US Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s most-watched inflation indicator, which is expected to influence the central bank’s interest rate decisions.
The pound was flat against the euro at 85p.
In the debt market, benchmark 10-year UK gilts were up fractionally to 4.2pc.
UK stock markets gained in early trading after a flurry of positive earnings reports, including from Haleon and Ocado.
Both the benchmark FTSE 100 and the midcap FTSE 250 were up 0.3pc.
Haleon rose 8.3pc to the top of the FTSE 100 after the Sensodyne toothpaste maker said it expected higher revenue in 2024, thanks to firm demand for its household products.
Man Group gained 3.7pc after the hedge fund posted a 17pc rise in assets under management, while Drax Group jumped 6.7pc to the top of the FTSE 250 as the UK’s largest source of renewable electricity posted a tenfold jump in annual profit and raised its dividend.
Ocado advanced 4.7pc after the online supermarket and technology group forecast faster growth this year.
However, keeping gains in check, the London Stock Exchange Group moved 2.3pc lower after reporting its preliminary full-year income largely in line with estimates.
Shares of lender Barclays also traded in the red, down 3.4pc as the stock traded without the right to the next dividend.
Ocado has threatened to sue Marks & Spencer over a multi-million pound payment for their online grocery partnership amid a growing row over performance.
Our retail editor Hannah Boland has the details:
The pair’s £750m joint venture Ocado Retail has failed to meet targets laid out when M&S agreed to set it up in 2019, Ocado said.
This means Ocado will not automatically receive a final instalment of £191m from M&S.
However, it said the deal with M&S “expressly provides” for the targets to be adjusted if the online grocery team made different decisions or actions than what was expected when the companies signed the joint partnership. 
Read how Ocado warned it could risk “formal litigation”.
Protesters sprayed blood-red paint on the offices of the insurers Probitas, AIG and Tokio Marine over its underwriting of fossil fuel clients.
The group, named Shut The System, covered the offices at 88 Leadenhall Street in London, stating: “Reject new fossil fuel clients or we’ll be back.”
It comes after Extinction Rebellion protesters entered the buildings of five major insurers in the City of London earlier this week.
French inflation eased to its weakest level since September 2021 while Spain’s consumer prices also dropped significantly.
France’s consumer prices index fell back to 3.1pc in February, compared to 3.4pc in January,
In Spain, inflation dropped from 3.5pc to 2.9pc, although this was slightly above expectations.
🇪🇸 Same for Spain, with core inflation easing by 20bp, to 3.4% YoY in February.🇪🇺 So far no sign of a change in trend post January noisy figures. pic.twitter.com/DJ3RZZrxgT
The UK’s largest and most controversial power station increased profits more than tenfold in 2023 on the back of increased power prices.
Our energy editor Jonathan Leake has the details:
Drax’s pre-tax profits hit £796m for 2023 – up from £78m the year before with the wood-burning plant at Selby in Yorkshire generating most of the company’s earnings.  
Adjusted earnings were £1.2bn, up from £731m.
Drax has attracted widespread criticism from environmentalists because it burns wood-chips imported from North American forests. Its other main asset is a hydroelectric facility at Cruachan in the Scottish highlands.
The Drax plant is, however, vital to the UK’s energy security because it generates more than 4pc of the nation’s electricity.
It also provides grid stability because it can be fired up during ‘dunkelflaute’ periods when low winds and sunshine slash output from wind and solar.
Generating companies have, however, been hit by the Electricity Generator Levy, imposed by the government because of the surge in profits linked to global energy price rises. That cost Drax Group £205m.
Stock markets in London rose as trading began as investors wait to see what key US inflation data holds later today.
The FTSE 100 was up 0.2pc to 7,642.37 while the midcap FTSE 250 rose 0.3pc to 19,063.84.
While the news of increased hiring will be welcomed by Jeremy Hunt, the Chancellor, who next week presents what could be his Budget, it will be of concern at the Bank of England, writes Eir Nolsøe.
Companies ramping up their hiring could be a sign that inflation will prove more stubborn, potentially pushing back the first cut to 16-year high interest rates of 5.25pc.
The Lloyds Bank research found that businesses have increased their pricing expectations again after two months of falls, with 61pc planning to ramp up prices over the next year.
In another development that will be of concern to rate-setters, wages are still growing fast, although the pace of increase has eased slightly.
The Bank of England’s policymakers have said that pay rises are a key concern for how long inflation will remain above its 2pc target. It is currently twice that at 4pc.
Britain’s biggest power station saw profits grow tenfold last year as households grappled with surging energy bills.
Drax, which once burned coal but now uses wood harvested in North American forests and shipped to the UK, known as biomass, said annual pre-tax profits jumped from £78m to £796m in 2023.
The North Yorkshire power plant revealed adjusted earnings before interest and other charges grew by 66pc to £1.2bn even as the energy crisis that has gripped Europe since the start of the Ukraine war eased.
The power supplier proposed increasing its final dividend by 10pc to 13.9p per share.
Drax Group chief executive Will Gardiner said: “Drax performed strongly in 2023 and we remained the single largest provider of renewable power by output in the UK.”
British Airways owner International Airlines Group (IAG) has reported record annual earnings thanks to the bounce back in travel demand.
IAG reported underlying operating profits of €3.5bn (£3bn) for 2023, nearly three times the €1.3bn euros (£1.1bn) in 2022 and higher than its pre-pandemic peak.
The group – which also owns airlines Iberia, Vueling and Aer Lingus – said demand continues to be robust, particularly from leisure travellers, with the group’s airlines 92pc booked for the first quarter of the year and 62pc booked so far for the first half.
Its results showed that pre-tax profits for the year jumped to €3.1bn (£2.7bn) from €415m (£355m) in 2022.
IAG chief executive Luis Gallego said: 
In 2023, IAG more than doubled its operating margin and profits compared to 2022, generated excellent free cash flow and strengthened its balance sheet position, recovering capacity to close to pre-Covid 19 levels in most of its core markets.
Our airlines operate in the largest and most attractive markets globally and we will continue to invest in our brands to transform the business, improve the customer experience and support the delivery of sustainable growth and world-class margins.
Online retailer Ocado has returned to an underlying profit as it continues a turnaround months after bosses at M&S expressed dismay at the performance of their joint venture.
Adjusted earnings before interest and charges reached £51.6m, up £125.7m from a loss of £74.1m in 2022, although Ocado slumped to a pre-tax loss of £394m in 2023, which was still an £107m improvement on the previous year.
Ocado Retail – its grocery venture with Marks & Spencer – also returned to an underlying profit and also increased revenues by 7pc as overall revenue rose by 9.9pc to £2.8bn.
Last summer Archie Norman, chairman of M&S, told shareholders that he was “not happy” with the performance of the joint venture and said there was “work to do” to improve the business.
Ocado chief executive Tim Steiner said:
I am pleased to report good progress across the group in 2023. 
Our technology is transforming the way people shop for food as we help some of the world’s best and most innovative retailers set the bar for excellence in grocery ecommerce worldwide. 
Businesses are expecting to increase staffing levels to the highest level in almost two years, in a sign that the recession may already have ended.
Companies have started the year on a more buoyant note after the UK economy contracted at the end of 2023, according to Lloyds Bank’s latest Business Barometer.
Confidence has remained well above average in the first two months of 2024, although it slipped two points from January to 42pc.
Meanwhile, businesses are the second-most optimistic about their trading prospects and the economy at any point since April 2017, amid hopes that interest rates will soon fall.
The improving outlook among companies comes as employers scale back plans to cut staff to the lowest level since 2017.
For workers weighing up a move there is good news too, as around half of bosses plan to expand their workforces in the year ahead.
The difference between those planning to hire and fire means staffing expectations are at their highest level since May 2022.
Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “This month’s data still reflects a positive mood among businesses despite a marginal fall in overall confidence. Firms appear to be upbeat about their prospects and the economy, supporting their positive staffing expectations.” 
Thanks for joining us. We begin with fresh data indicating the recession may already be over, as businesses plan to increase staffing levels in nearly two years.
Lloyds Bank’s latest Business Barometer showed  onfidence has remained well above average in the first two months of 2024.
1) Embracing AI is the only way to cut civil service jobs, says Deputy PM | Cabinet Office unveils £110m plans to speed up ‘dogsbody’ work in public sector
2) Asda’s private equity backer snaps up stake in UK pet shop | Announcement triggers 3pc fall in rival Pets at Home’s share price
3) Boeing has 90 days to show how it will meet safety and quality standards, says US regulator | The aeroplane manufacturer has been trying to draw a line under a safety scare
4) Why Britain’s state pension time bomb is about to explode | Paying for a wave of retirement is no longer a problem politicians can ignore
5) Sunak pledges to retain triple lock for millions of pensioners | PM will commit to keeping the policy in the Tory Party manifesto if he wins election
Asian stocks were mostly weaker ahead of crucial US inflation data that could provide fresh clues on when the Federal Reserve will cut interest rates.
Japan’s key Nikkei index closed down 0.1pc, or 41.84 points, to end at 39,166.19, while the broader Topix index ended flat at 2,675.73.
However, Chinese stocks rebounded from Wednesday’s sharp decline to keep them on track for their best month since November 2022.
Meanwhile, cryptocurrency bitcoin fluctuated around $61,400 following a three-day, 24pc ascent that brought it to a more than two-year peak at $63,933.
Investors are wary ahead of the release later in the day of the Fed’s preferred inflation gauge, the personal consumer expenditures (PCE) price index, after dialling back bets for a first rate cut to June. At the start of the year, wagers were on March.
Thursday also sees inflation data from German states, France and Spain, ahead of the eurozone’s figures on Friday.
South Korea’s Kospi declined 0.5pc, while Taiwan and Australia benchmarks were flat.
In Wall Street, the S&P 500 slipped 0.2pc, to 5,069.76, continuing its quiet and listless run since setting a record last week. 
The Dow Jones Industrial Average of 30 leading American companies dipped 0.1pc, to 38,949.02. Meanwhile, the Nasdaq Composite index sank 0.5pc, to 15,947.74 a day after pulling within 0.1pc of its record set in 2021.
In the bond market, the yield on the benchmark 10-year US Treasury bonds slipped to 4.26pc from 4.31pc late on Tuesday.