- The Agents reported that business confidence across a wide range of industries had ebbed in recent months. Many contacts attributed the fall in confidence to the announcements made in the June Budget, although few contacts had changed their plans for output, investment or employment as a result.
- Consumer spending growth had softened over the past few months, reflecting weaker retail sales growth.
- The number of housing market transactions had also eased back.
- Investment intentions remained consistent with a gradual, rather than robust, rise in spending.
- Exports had picked up further, driven by a pickup in world demand.
- Services turnover had edged higher, although volume growth in the professional and financial sector was likely stronger than growth in turnover, reflecting lower prices and fees than a year earlier.
- Manufacturing output growth had been robust through Q2, reflecting stronger export growth and, to a lesser extent, increases in output for the domestic market.
- Construction activity remained subdued. Despite a rise in repair and maintenance, commercial construction activity remained weak, and some public sector projects had been postponed or cancelled.
- Private sector employment intentions had risen modestly in recent months. But contacts expected offsetting cuts in public sector headcount over the next year or so.
- Pay growth remained muted, albeit a little stronger than at the start of 2010. Many non-labour input costs had risen further.
- Contacts reported that imported goods price inflation had edged up, due to higher inflation and some emerging capacity constraints in the Far East.
- Annual consumer price inflation remained elevated in July, as weaker goods price inflation was offset by a modest rise in services price inflation.
- It remained too early to assess definitively the impact of the announced rise in VAT. But initial findings suggested that, on balance, contacts expected to pass through much of the rise early in January 2011.
Agents' summary of business conditions - August 2010