Agents' Summary of Business Conditions - October 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 17 October 2012

Spending on consumer goods and services continued to grow at a gradual pace. But the weather, together with sporting events over the summer, had affected the type and timing of purchases.
Activity in the housing market picked up slightly. Contacts remained concerned though that this pickup would not be sustained, as continuing worries about the economic outlook restrained both potential buyers and sellers.
Investment intentions continued to ease back, suggesting there would be little change in the level of capital spending by firms over the next six months.
Export growth continued to slow, as euro-area demand weakened further.
Turnover in the business services sector was still increasing at a gradual pace.
Manufacturing output slowed further and was now broadly flat on a year ago. The slowdown appeared more widespread.
Construction output continued to fall, as the slow recovery in private sector activity remained below the scale needed to replace public sector projects as they reached completion.
For many companies the cost of borrowing appeared to be stabilising, albeit at levels well above a year ago.
Typically larger firms had access to credit on good terms, but smaller firms still struggled to secure credit. Overall, demand for credit remained subdued.
Employment intentions indicated there would be little job creation in the private sector over the next six months.
In sectors where growth remained stronger, firms were operating close to capacity. Whereas in areas of persistent demand weakness, by contrast, there was typically a higher degree of slack. Manufacturers had seen capacity utilisation fall back recently, as activity slowed.
Growth in labour costs per employee remained modest.
Non-labour input cost inflation remained subdued. But contacts thought it less likely that inflation would fall further over the rest of the year, following the recent price increases of oil, cereals and some basic foodstuffs.
Output price inflation had declined further, in response to past falls in input costs and weaker demand.
The fall in consumer price inflation had slowed, in part as a result of renewed increases in energy and fresh food prices.