Agents' Summary of Business Conditions - February 2008

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 19 February 2008

Consumption growth eased, driven by slower growth in spending on consumer services. Growth in spending on goods stabilised in the month.
The easing in demand for housing continued, and house price inflation fell.
Investment intentions fell further in both the service and manufacturing sectors. Tighter credit conditions weighed on investment intentions, mainly through their effect on uncertainty about demand.
Demand for exports remained firm, as did forward orders.
Growth in manufacturing remained healthy, while that in the construction and service sectors slowed.
Employment intentions fell across all main sectors, and recruitment difficulties eased.
Capacity pressures lessened, especially in service industries.
Growth in total labour costs remained well contained. The Agents’ pay survey identified that companies expected little change in pay settlements for 2008, and only modest upward pressure on total labour costs. (For details see the box.)
For manufacturers, annual input price inflation picked up sharply, while annual output price inflation was little changed. Consequently, margins were compressed, though a growing share of companies were intending to pass on recent cost increases.
Annual consumer price inflation increased, driven by increases in the prices of energy and food.