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UK construction growth hits two-year high as housebuilding recovers; ECB interest rate cut expected today – business live

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US clears way for antitrust inquiries of Nvidia, Microsoft and OpenAI

Some of the biggest players in the artificial intelligence field are facing the prospect of an antitrust investigation.

US regulators have cleared the way for antitrust inquiries into Nvidia, Microsoft and OpenAI, according to reports this morning, as they intensify their scrutiny of AI.

The New York Times reports that the US Justice Department and the Federal Trade Commission have reached a deal to split responsibility for investigating the three major players in AI.

Once completed, probably in the coming days, the deal will mean the DoJ will take the lead investigating Nvidia, whose chips are driving the AI revolution, and whose market capitalisation hit $3trn last night.

This leaves the FTC with the task of examining OpenAI, maker of the ChatGPT chatbot, which has received billions of dollars of investment and support from Microsoft, which owns 49% of its shares.

Nvidia, OpenAI and Microsoft are in the spotligh due to concerns over their dominance of the AI space, and worries that. artificial intelligence will cost millions of jobs, and that safety oversight within the industry is weak.

Scoop: Antitrust regulators have reached a deal that clears the way for federal investigations into the conduct of Nvidia, Microsoft and OpenAI in the AI industry. It is expected to be finalized in the coming days. https://t.co/mJ8zCSrxjP

— David McCabe (@dmccabe) June 6, 2024

The move shows that the AI industry faces growing regulatory scrutiny.

Back in January, the FTC launched an inquiry on Thursday into investments and partnerships made by some of the biggest companies in the generative artificial intelligence space.

Just last week, US antitrust chief Jonathan Kanter told a conference that there are structures and trends in AI that should give us pause’”.

Kanter, the assistant attorney general for the antitrust division at the Department of Justice, explained:

AI relies on massive amounts of data and computing power, which can give already-dominant firms a substantial advantage.

Powerful network effects may enable dominant firms to control these new markets, and existing power in the digital economy may create a powerful incentive to control emerging innovations that will not only impact our economy, but the health and well-being of our society and free expression.

Key events

Full story: Microsoft, OpenAI and Nvidia face antitrust investigation

Dan Milmo

Microsoft, OpenAI and Nvidia face increased antitrust scrutiny of their roles in the artificial intelligence industry after a report that US regulators have reached an agreement on investigating the companies.

The New York Times reported that the US justice department and the Federal Trade Commission (FTC) have reached an agreement on investigations into the main protagonists in the AI market. The deal is expected to be completed in the coming days, according to the report.

The justice department will lead on investigating whether Nvidia, the leading maker of chips that train and operate AI systems, has broken antitrust laws that oversee fair competition in business and aim to prevent monopolies, said the NYT on Wednesday.

Less risk of Britain suffering power blackouts this winter

Jillian Ambrose

The risk of blackouts in Great Britain will be lower this winter thanks to more gas-fired power and a new power cable linking the UK to Denmark, according to National Grid’s electricity system operator (ESO).

Kayte O’Neill, the ESO’s chief operating officer, said the group’s initial assessment of the winter ahead suggests that the country will have “sufficient margins” of electricity supplies relative to demand.

O’Neill says:

“Factors such as increased interconnector capacity, new gas generation, growth in battery storage capacity and increased generation connected to the distribution networks are contributing to higher margins than last winter.”

National Grid launched the Viking Link power cable earlier this year after it first began importing electricity from Denmark in December. The FTSE 100 company is expected to spin off the ESO later this summer to become an independent public body.

ESO’s early view of the winter ahead includes a supply margin of 5.6 GW, or 9.4%, compared with a margin of 4.4 GW, or 7.4%, which they predicted ahead of last winter.

In its review of the last winter it said that actual margins were “broadly within the expected range” but did not provide a figure.

The Construction PMI report has included encouraging signs that UK inflation pressures are easing.

Building firms reported that lead times (the wait to obtain raw materials) fell to the shortest in severn months.

So with supply-chain conditions improving, companies reported only a small increase in input costs last month – with prices rising at the slowest rate in five months.

Construction firms also signalled a marked improvement in the availability of sub-contractors, while prices charged by sub-contractors slowed, but still “increased solidly”.

Michael Wynne, director of the sustainable housebuilder Q New Homes, has hailed this morning’s news that UK construction growth strengthened last month.

Wynne declares:

“Housebuilding is finally coming out of the deep freeze. While it’s still lagging behind the rest of the construction industry, residential building has inched back into growth territory.

“But this is still a thaw rather than a rebound. After months of contraction, housebuilding output is only expanding slowly.

“Nevertheless the mood among housebuilders is improving, as the headwinds that held back our industry for so long begin to ease.

“Building cost inflation – which wiped out many smaller players’ profit margins during the dark days of 2023 – continues to soften.

UK firms planning lower pay rises in coming year

UK companies are planning to raise wages at a slower pace this year – which will cheer the Bank of England (BoE), but depress workers.

The BoE’s latest ‘Decision Maker Panel’ (DMP) survey, just released, shows that companies expect wage growth to be 4.5% in the year ahead.

Annual wage growth was 6.0% in the three months to May, so this shows that firms expect their wage growth to decline by 1.5 percentage points over the next 12 months.

The BoE has cited wage growth as a key factor determining how soon it can cut UK interest rates.

The DMP polls chief financial officers from small, medium and large UK businesses.

It also found that:

  • Businesses expect their output price inflation to decline over the next year. Year-ahead own-price inflation was expected to be 3.9% in the three months to May, down from 4.0% in the three months to April.

  • Firms reported annual employment growth of 1.5% in the three months to May, lower than the 1.7% reported in the three months to April.

  • Firms reported that the average interest rate that they were paying on their borrowing (both bank and market based) was 6.6% in May, 0.4 percentage points lower than reported in April.

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Eurozone retail sales drop in April

Back in the eurozone, retail sales have weakened, suggesting that consumer spending remains subdued despite recent falls in inflation.

Retail sales volumes (how much people bought in the shops) fell by 0.5% across the eurozone in April compared with March, and was 0.6% lower in the European Union.

That largely reverses a 0.7% rise in retail sales across the eurozone in March.

On an annual basis, sales volumes were flat compared with April 2023, and 0.1% lower in the EU.

Barry Goodall, partner and head of construction at independent law firm Brabners, agrees that the UK construction sector is strengthening:

“A third consecutive month of growth adds to the belief that the construction sector has turned a corner as economic conditions continue to improve.

“While it remains a ‘watch’ industry for insolvencies, the many contractual challenges we saw arise amid the period of rampant inflation have begun to ease and firms are planning ahead with greater certainty around input costs and interest rates.

“If the latter fall as anticipated, we can expect a relatively positive second half to the year with demand also likely to be boosted by the momentum provided by an early General Election.”

Today’s construction PMI report shows the sector is on a more stable footing heading into the key summer months, reports Brian Smith, head of cost management at AECOM:

“There is further room for optimism as well. An early General Election reduces the risk of market inertia and will almost certainly embolden decision-making in the second half of the year. With the rate of inflation reducing back to normal levels, the prospect of falling interest rates should also breathe much-needed wind into the sails of housebuilders.

“That said, contractors will be hopeful of more concrete commitments to infrastructure investment within party manifestos before planning too far beyond the end of 2024.”

A boost in new orders saw the S&P Global UK Construction Purchasing Managers’ Index rise to 54.7 from 53.0 in April, the fastest inc for two years. Residential projects may have only inc’d marginally but this was the first time since May 2022, that all three monitored categories… pic.twitter.com/jOytnMHvQn

— Emma Fildes (@emmafildes) June 6, 2024

This chart shows how housebuilding activity returned to growth (over 50-points on the PMI scale) last month, after a long contraction:

Photograph: S&P Global

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