US Jobless Rate Falls To 5.6% In December

The US jobless rate has tumbled to 5.6% - its lowest level since June 2008 - in a futher indication economic recovery remains on track despite weakness elsewhere.

The economy added 252,000 net new jobs last month on top of an upwardly revised jump of 353,000 in November, the Labor Department said.

The unemployment rate fell 0.2 percentage points though some of the decline reflected people leaving the labor force.

December marked the 11th straight month of payroll increases above 200,000, the longest stretch since 1994.

The data - which followed positive third quarter GDP numbers and solid industrial production and retail reports for November - suggested the economy was weathering turbulence in Europe, Japan, China and some emerging markets.

However, average hourly earnings fell 5 cents.

Wage reports have been a key factor for the Federal Reserve as it weighs the timing for an interest rate increase.

The central bank has kept its short-term interest rate near zero since December 2008.

Most economists expect that to change in June, with the outlook for wages improving at a time when gas costs are plummeting because of the dive in world oil costs.

It is hoped that more dollars in consumers' pockets will find their way into the economy.

The job figures meant that the unemployment rate fell by 1.1% across 2014 - with wider surveys suggesting that job growth was at its highest level since 1999.

Each sector saw employment growth in December - with construction jobs rising 48,000.

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Pay 'Soars' As Job Hunters Spoiled For Choice

A shortage of skills could mean the job hunter "finally becomes king" this year, with pay levels soaring for staff placed by employment agencies.

The finding, in a monthly report on the job market by the Recruitment and Employment Confederation (REC) and professional services group KPMG, was put down to shortfalls in availability - particularly among temporary workers.

The study suggested candidates were becoming choosy about which jobs to take and pay for temporary staff had risen at its strongest rate for three months.

Pay rises until recently had lagged behind the rate of inflation, which left families with a six-year squeeze on their budgets.

Pay levels were held down by the effects of the financial crisis and wider employment landscape.

Bernard Brown, of KPMG, said of the current situation: "A strong year for the UK jobs market finished with a flourish as temporary roles saw an upswing in popularity.

"More than one in three recruiters suggest that employees looking for short-term roles are being increasingly spoilt for choice as organisations search for help in an effort to fulfil customer orders.

"Good news for candidates also extends into the pay packet. Once again, a shortage of skills in key areas has led to a rise in the starting salaries on offer.

"It could mean that 2015 becomes the year in which the candidate finally becomes king."

The report warned that the improved power being enjoyed by job hunters could be short-lived.

Kevin Green, the chief executive of the REC, said: "As we enter 2015 the jobs market continues its strong performance.

"Recruiters are helping an increasing number of businesses find new permanent employees, and skills shortages in most areas of the economy mean that competition for quality candidates is driving up starting salaries.

"Economic growth for 2015 looks sustainable, however the concern now is that political uncertainty could spook the market as we approach a General Election.

"The prospect of increased government intervention in the labour market as promised by the left, questions around Britain's position in the EU which are being posed by the right, and the potential for protracted negotiations around a hung parliament come May could affect business confidence and hence future hiring."

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RBS In Talks With UKFI Over £2bn Debt Sale

By Mark Kleinman, City Editor

The agency which represents taxpayers' stakes in Britain's bailed-out lenders is in talks with Royal Bank of Scotland (RBS) about a £2bn capital-raising which could eventually dilute the Government's shareholding.

Sky News has learnt that UK Financial Investments (UKFI) is discussing with RBS the terms of an additional Tier 1 (AT1) capital buffer which the bank said it would seek from investors last month.

RBS said when it passed a stress test run by the Bank of England in December that the £2bn AT1 issuance would take place during the course of this year, and would see the instrument convert to shares in RBS if its capital buffer fell to 7%.

However, sources said on Friday that the £2bn capital-raising was being complicated by a clause in RBS's taxpayer bail-out which prevents taxpayers' shareholding being diluted through the launch of such convertible securities.

The issue relates to B-shares held in RBS by UKFI, which were created at the time of its bail-out by taxpayers in 2009.

The bank remains roughly-80% owned by the Government, with apparently little possibility of a substantial share sale at a profit for several more years.

RBS has 51 billion B-shares in issue, which do not carry voting rights but can be converted at a rate of ten-for-one into ordinary shares.

In a prospectus issued in 2009 outlining the structure of these B-shares, RBS said they would include rights which would prevent taxpayers' stake being artificially reduced.

The potential obstacle to the new capital-raising, which was an important element of the PRA's decision to approve RBS's current capital plan, was highlighted last month in a previously unreported research note by Autonomous, a leading analyst of financial institutions.

"As part of the capital plans it had to present as a result of the poor stress test result, RBS signalled that it will issue £2bn AT1s next year," Autonomous said.

"We have previously argued that there are legal obstacles to AT1 issuance by RBS, which we continue to see as a problem.

"However, if the PRA is prepared to accept AT1 issuance as part of RBS's remedial plan, we assume regulators must have sufficient clarity that a legal solution to RBS's AT1 problem can be found."

One source said that RBS, UKFI and the PRA were confident that the issue could be resolved, and pointed out that at the time the B-shares were devised, convertible securities such as AT1s were not conceived as a potentially important part of a bank's capital structure.

Insiders insisted that the taxpayer's interests would be fully protected in any AT1 capital-raising and that they would in any event not face being diluted at the point of issuance.

RBS and UKFI declined to comment.

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Tesco To Cut Stores and Jobs In Revival Plan

Tesco has confirmed it is to close 43 unprofitable UK stores and halt construction on almost 50 others as part of a plan to revive its fortunes.

In the wake of the accounting scandal which saw group chief executive Dave Lewis take charge of the UK business, Tesco said it had enjoyed a good Christmas with like-for-like sales falling just 0.3% in the six weeks over Christmas - better than analysts predicted.

Like-for-like sales in its third quarter were down 2.9%.

But Tesco's sales woes - a result of a lack of focus on its core store offering in the past and the strong challenge from discounters - are only part of the problem for Mr Lewis.

He used the trading update to confirm a number of changes in order to ensure no repeat of the £263m profit over-statement - including new guidelines for supplier negotiations - and streamline the business.

Its head office in Cheshunt is to close in 2016 while it confirmed the sale of Tesco Broadband and Blinkbox video steaming service to TalkTalk.

Changes to store management and working-hour flexibility structures would deliver savings of £230m annually but result in a one-off cost of £300m.

It plans to close the company defined benefit pension scheme to staff but it said colleagues would soon be offered turnaround-based bonuses.

Tesco also confirmed it had poached Halfords boss Matt Davies to run the UK business but he would not be able to start work until 1 June.

More follows...

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Samsung Forecasts Annual Profit Fall Of 32%

Strong smartphone competition is set to push annual profits down for the first time in three years at Samsung Electronics.

The South Korean firm forecast a 32% fall in operating profit to $22.6bn (£15bn), ahead of the publication of its financial results later this month when it will also give a breakdown on the performance.

Fourth quarter profits were expected to drop 37% from a year earlier - with analysts suggesting the figure could have been worse but for strong demand for memory chips within its semiconductor division.

Total quarterly sales dropped 12%.

Samsung is hunting new revenue streams from the so-called Internet of Things - connectivity with everyday electronic items - to reduce its recent reliance on smartphones.

It had previously pledged that by 2017 all Samsung televisions would be Internet connected and that within five years all Samsung hardware products would be ready for the Internet of Things.

The company is taking its software, which is designed to challenge Google's Android operating system, to television sets.

Samsung said its all-new internet-connected televisions this year will run on Tizen, its own operating system.

Its Galaxy smartphones led the market in 2012 and 2013, pushing past Nokia, Motorola and Apple in terms of sales volume.

But that growth ground to a halt last year as its new models disappointed and it was squeezed on price in the low and mid-end phone markets by Chinese smartphone makers such as Xiaomi, which overtook Samsung in China and India.

Samsung responded by saying it was to reduce the number of models it produces to lower costs and help boost innovation.

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M&S: Online Delivery Woes Hurt Xmas Sales

Marks and Spencer has revealed a sharp drop in clothing, gifts and homewear over Christmas, partly blamed on delivery woes.

The retailer also blamed an unseasonably warm autumn for a weak clothing performance as it outlined a 5.8% slump in like-for-like sales in its general merchandise division during the 13 weeks to 27 December.

M&S, which insisted its winter clothing range was well received, said disruption at its Castle Donington distribution centre hurt its performance in December.

Its food division - which has been a consistant performer - delivered record sales growth of 17% over Christmas week. 

More follows...

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Supermarket Wars: Price Cuts Revealed

Sainsbury's and Asda have announced details of price cuts as their rival Tesco prepares to unveil its turnaround plan.

Asda was first to confirm it was making £300m in customer savings during the first three months of the year, saying it was part of a previously announced £1bn drive to help it close the gap with hard discounters which have been eating away at the dominance of the 'Big Four' chains.

Asda, which reported its worst quarterly sales performance in nearly a decade in November, said the cost of 2,500 "essentials" would fall.

Sainsbury's later said it was to implement price cuts on 1,000 of its most popular products, costing it £150m, and customers would see more than 700 new regular prices in supermarkets this week.

Both chains, along with market leader Tesco and Morrisons, have seen customers drip away to the likes of Aldi and Lidl at the lower end of the price spectrum while Waitrose has captured some of the better off.

Asda's chief merchandising officer for food, Barry Williams, said: "After a great Christmas with the family, January is the month we all start looking at the size of our waists and our wallets.

"We're going further than ever before, rolling back those every day, can't live without items at a bigger percentage than we've ever been able to do previously.

"With hundreds of products at 50p, and even more at 15% less than normal, we're aiming to make a big difference for families in their weekly shop."

Sainsbury's chief executive Mike Coupe said: "We are investing £150m per year for the next three years in some of our customers' most popular purchases, with a total of 1,000 prices cut since we announced this investment in November.

"This will come as welcome news to customers who might be feeling the pinch after Christmas.

"These lower everyday prices are a part of our ongoing commitment to offering our customers great quality products at great prices."

The announcements were made less than 48-hours before Tesco's chief executive was expected to outline a recovery plan for its UK business.

While its supermarkets remain the dominant force in the grocery market, Tesco was slow to counter the discount threat and it has since lost further market value as a result of its £263m profits overstatement, which remains the subject of several investigations.

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Energy Firms 'Passing On' Lower Oil Costs

The energy industry has insisted it is passing on to consumers sharp falls in wholesale oil and gas costs after the Government said firms were being watched "like hawks."

The body representing household suppliers spoke up after the Chancellor confirmed a review of pricing in areas such as motor fuel, air fares and utilities.

A Treasury spokesman said: "The Government is conducting studies of industries like the utilities and the airlines.

"We are examining if any action needs to be taken."

The cost of a barrel of Brent crude is currently hovering slightly above $50 - a fall of more than 50% on just three months ago.

While George Osborne welcomed further recent falls in fuel pump costs, he said it was vital that the slump in the oil price was passed on to households.

Energy UK, which represents the so-called 'Big Six' household firms including British Gas, insisted families were benefiting in full.

Its chief executive Lawrence Slade said: "Energy suppliers are passing on price cuts to customers.

"When people shop around they can easily find deals that are over £100 cheaper than this time last year and in line with cuts in wholesale energy prices."

Firms have argued that because they have to buy raw energy up to three years in advance, they can not simply cut bills by 50%.

They point out that the wholesale cost now makes up less than half of the total bill - with other network charges rising sharply in recent years.

But the energy secretary Ed Davey said: "The Government will be watching energy companies like hawks to ensure falls in wholesale gas prices are passed on as quickly as possible to consumers."

The sector is already the subject of an investigation by the Competition and Markets Authority which could decide to break up firms which both produce energy and supply it to homes.

Labour insisted the Government was to blame for the lack of clarity on bills.

Shadow energy secretary Caroline Flint said: "The Tories have had five years to deal with the problem of energy companies not passing on reductions in wholesale costs and have done absolutely nothing about it.

"Labour has consistently said that the regulator should have the power to force energy companies to cut their prices when wholesale costs fall.

"We need action, not another inquiry. If this Government won't put an end to rip-off energy bills and give the regulator the power to cut prices, then the next Labour Government will."

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Sainsbury's Suffers Worst Xmas In A Decade

Sainsbury's has reported a 1.7% fall in like-for-like sales over its Christmas quarter - the worst performance for a decade.

The chain, which like its main 'Big Four' competitors has been losing business to hard discounters at the bottom and Waitrose at the top end, said like-for-like sales were down 3.9% when the effects of fuel sales were included.

Total sales fell by just 0.4% - reflecting the impact of its growing convenience store network in the past 12 months.

But the company warned that the outlook remained challenging, given the squeeze on the middle market, with the fall in food prices likely to continue.

The supermarket chain had confirmed on Monday that it was implementing cuts on 700 products this week to help counter the discount threat.

Sainsbury's said it enjoyed a record-breaking week before Christmas with 29.5 million customer transactions.

Chief executive Mike Coupe said: "Sainsbury's has provided a great Christmas for our customers.

"Food price deflation and falling fuel prices have enabled our customers to treat themselves over the festive period."

The chain said its Taste the Difference range grew by five per cent year-on-year in the period with sales of its Conegliano Prosecco rising by more than 30%.

It sold over 57 million mince pies and over 550,000 turkeys, up 8% on last year.

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Success Rolls On As Car Firm Posts Record Sales

Rolls-Royce sold more cars than ever before last year.

The company delivered 4,063 cars in 2014 - its highest total in 111 years.

A 12% increase on 2013 means sales have now risen five-fold since 2009.

In 2014 sales rose 13% in the UK, 75% in Australia, 60% in Japan, 40% in Europe as a whole, 30% in the USA and 20% in the Middle East.

The best-selling dealership was in Abu Dhabi - though the US remains the company's biggest market, followed by mainland China.

Sales were boosted by orders for the Ghost Series II launched in November. The Wraith also enjoyed its first full year on the market.

The company has created 200 permanent jobs in 18 months, meaning more than 1,500 people now work at its Goodwood headquarters in West Sussex.

Business Secretary Vince Cable said: "Rolls-Royce motor cars are famous throughout the world with increasing numbers now exported abroad. The skill and dedication of its workers here in Britain has led to another very successful year.

The US remains the company's biggest market, followed by mainland China

"The UK's automotive industry is thriving with a new car rolling off the production line every 20 seconds, and increasing levels of investment that's helping to secure local jobs.

"Through our industrial strategy we are backing companies like Rolls-Royce as they go from strength to strength, giving them the right environment to invest with confidence and create high-skilled jobs."

The Rolls-Royce figures precede statistics from the Society of Motor Manufacturers and Traders that are expected to show new-car sales in the UK reached a 10-year high of 2.46 million in 2014.

Rolls-Royce Motor Cars chief executive Torsten Muller-Otvos said: "This fifth consecutive record year saw Rolls-Royce Motor Cars break through the 4,000 car sales level for the first time in its history.

"The result confirms that our strategy of balanced, sustainable and profitable growth is delivering and that Rolls-Royce remains the world's leading luxury goods brand."

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