Agents' Summary of Business Conditions - February 2012

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 22 February 2012

Nominal consumer demand continued to grow slowly, with many consumers directing their spending towards essential goods and services.
The level of activity in the housing market remained subdued, but enquiry numbers had picked up in January.
Investment intentions had softened further, although more recently a few contacts reported having resumed projects that had been on hold, despite ongoing uncertainty about the outlook.
The pace of goods export growth continued to moderate. That reflected slowing world demand growth, particularly in the euro area, while demand in Asia remained robust.
The growth rate of turnover in business services had slowed further, reflecting weaker demand and downward pressure on some fees, although some contacts recently noted a pickup in activity, as customers had become a little less cautious.
Manufacturing output for the domestic market continued to rise gradually.
The level of activity in the construction sector was slightly lower than a year earlier. But the pace of contraction had slowed a little.
Contacts reported that credit conditions had tightened in recent months, with both small and large businesses noticing the change in the stance of lenders.
Employment intentions in the private sector continued to soften, and suggested that employment was likely
to be broadly flat over the next six months.
Capacity utilisation in the manufacturing sector had fallen back recently, reflecting both slowing growth in demand and past investment and recruitment. In the service sector too, weakening activity had caused spare capacity to widen.
Labour costs continued to grow at a moderate pace, with the outlook for pay settlements in 2012 broadly the same as in 2011.
Inflation in the price of imports of finished goods fell back further this month, suggesting that the recent slowing in the pace of increase in raw material prices was starting to feed through.
Manufacturing output price inflation continued to moderate. Manufacturers’ pricing power had weakened following a reduction in domestic demand.
Annual retail goods inflation slowed further, but consumer services inflation remained elevated.