Good morning. Today we're talking about the surprising labour market data, anti-competitive supermarkets and Arm prepares to float.

Big Stories

Labour market surprise

Pressure increased on the Bank of England to keep interest rates higher for longer after a stronger than expected labour market report yesterday. The unemployment rate unexpectedly fell to 3.8% in the three months to April, better than the 4.0% expected by analysts. Meanwhile average earnings excluding bonuses grew at an annual rate of 7.2% for the quarter to the end of April, the biggest jump in 20 years. The wage growth was in part due to the 10% rise in the national minimum wage in April. Pay data is a key figure in terms of consumer inflation, currently at 8.7% compared to the 2% target. Investors now expect the UK central bank to hike rates over the coming months to a peak of 5.75% versus the 4.5% today.

Grocers called out

The competition regulator has told Sainsbury's and Asda to stop using "unlawful" land agreements that prevent rival chains opening stores nearby. The Competition and Markets Authority said it had found 32 examples between 2011 and 2019 when the supermarkets placed restrictions on land agreements which, it said, was anti-competitive. The CMA took action against Tesco in 2020 for 23 breaches of the land rules, and Waitrose in 2022 for seven breaches. Sainsbury's has agreed to remove the outstanding restrictions the CMA identified from its land agreements. The restrictions identified within Asda's land agreements have been removed. The move is part of wider action to tackle the cost of living crisis, with the regulator also investigating supermarkets over high food and fuel prices.

Arm prepares for stock market

British chip designer Arm, owned by Japanese conglomerate SoftBank, is in early talks with potential strategic investors including US tech giant Intel to anchor what will be one of the largest initial public offerings of the year, according to sources. The Cambridge-based company, whose tech is inside almost every smartphone, used to be listed in London before being taken over by SoftBank in 2016 in a deal worth £23bn. The UK government had tried to persuade the company to relist in London. But insiders said the persistent political instability and too shallow an investor base in London made New York more attractive. In April Arm announced it would be looking to list in New York later this year – much to the disappointment of the City of London - and could raise as much as $10bn.

Elsewhere...

Red light: Regulators in the US have asked a judge to block Microsoft from completing its $69bn purchase of Call of Duty maker Activision Blizzard.

New boss: Twitter’s new chief Linda Yaccarino has sent her first memo to employees which echoes Elon Musk’s goal for the company to be a “global town square”.

Sushi takeover: The business behind restaurant chain Yo! Sushi has been bought by one of Japan’s biggest food companies in a deal worth £500m.

End of the line: Cineworld's London-listed holding company is preparing to file for administration as part of a comprehensive financial restructuring that will wipe out its shareholders.

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