Agents' Summary of Business Conditions - June 2005

We regularly publish a summary of reports compiled by our twelve regional Agents following discussions with at least 700 businesses across the UK every reporting period.

Published on 21 June 2005

Retail sales values were broadly flat in May compared with the previous month. Demand remained subdued for consumer durables. Growth of household spending on services may have eased a little, partly reflecting reduced spending on housing-related financial services.
House prices and transactions were stable. Estate agents now expect the housing market to remain fairly flat in the months ahead.
Export growth remained modest. Sterling’s recent weakening against the dollar improved margins for some contacts. Euro-area demand remained subdued.
Investment intentions were firm, underpinned by the need to raise efficiency and, in the service sector, a lack of spare capacity.
Manufacturing output growth seemed to have stalled and some contacts expected the level of output to fall slightly in the second half of the year.
Construction output growth was steady.
Service sector output growth may have slowed a little, reflecting lower growth of household spending on services.
Employment growth weakened a little, mostly due to an increased rate of job loss in manufacturing and weaker recruitment in the public sector.
Whole-economy capacity utilisation remained a little above normal.
Pay pressures continued to edge up.
Input price inflation was little changed.
Gradually increasing cost pressures were having little impact on consumer price inflation, partly because some retailers’ margins were squeezed by the slowdown in consumer spending.