The December DMP survey was conducted between 1 and 15 December and received 2,254 responses.
Firms reported that their output prices rose by an average annual rate of 5.9% in the three months to December, falling from 6.6% in the three months to November. The single month data for December fell to 4.9%, 1.1 percentage points lower than in November. Note that the DMP covers own prices from firms across the whole economy, not just consumer-facing firms.
Looking ahead, businesses expect their output price inflation to decline over the next year. Year-ahead own-price inflation was expected to be 4.4% in the three months to December, unchanged from the value reported in the three months to November. Output price inflation is, therefore, expected to decline by 1.5 percentage points over the next 12 months based on three-month averages.
One-year ahead CPI inflation expectations decreased to 4.0% in December, down from 4.4% in November. This resulted in the three-month moving average falling by 0.3 percentage points to 4.3% in December. Three-year ahead CPI inflation expectations also fell to 3.1% in the three months to December, 0.1 percentage points lower than reported in the three months to November.
Firms reported annual employment growth of 2.8% in the three months to December, lower than the 2.9% reported in the three months to November. However, expected year-ahead employment growth strengthened to 1.5%, 0.1 percentage points higher than in the three months to November. The DMP provides a crosscheck on employment growth while the Labour Force Survey remains temporarily suspended.
Expected year-ahead wage growth increased marginally to 5.2% on a three-month moving average basis. Expected year-ahead wage growth was lower than realised annual wage growth, which stood at 6.9% for the three months to December.
Uncertainty fell marginally in December: 51% of firms reported that the overall level of uncertainty facing their business was high or very high, lower than 53% of firms who reported this in November. Sales uncertainty and price uncertainty both remained flat on a three-month moving average basis.
The November and December DMP surveys also included questions on how the rise in interest rates on existing borrowing (both bank and market-based) and on new borrowing were impacting firms’ sales, capital expenditures and employment. On average, firms reported that sales in the third quarter of 2023 were 4% lower as a result of interest rate increases, while capital expenditures were 8% lower and employment was 1.5% lower. By Q3 2024 firms expected sales to still be 4% lower than they would have been in the absence of interest rate increases, while capital expenditures are expected to be 9% lower and employment 1.7% lower.