Agents' Summary of Business Conditions - February 2013

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 20 February 2013

Consumer goods sales during Christmas rose modestly on a year earlier, in line with retailers’ expectations. Few anticipated a pickup in growth in the near term given the headwinds facing the economy. Growth in demand for consumer services remained subdued.
There were tentative signs of a gradual increase in housing market activity, supported by reductions in mortgage costs. Some contacts thought that the Funding for Lending Scheme (FLS), along with some specific incentive schemes, was providing a stimulus to house sales.
Corporate credit availability was gradually improving, though less so for smaller firms where conditions remained tight. There were some tentative signs of lender forbearance starting to wane in the commercial property market.
Investment intentions continued to edge higher.
Exports of goods were on average reported to be growing slowly on a year earlier, with weak euro area demand offset by growth in other markets.
Modest growth in the output of business services had continued.
Manufacturing output for the domestic market was reported to be broadly flat on a year earlier, with growth in some ‘high-tech’ areas offset by weakness in construction-related sectors.
Construction output remained lower than a year ago.
Employment intentions continued to edge higher in business services but declined for consumer services, partly reflecting recent high street failures.
Capacity utilisation remained a little below normal.
The rate of growth in labour costs per employee edged higher. Wage growth was expected to be little changed in 2013, though larger firms expected some upwards pressure on labour costs from pensions contributions.
Non-labour costs and finished import prices had continued to drift upwards.
Output price inflation remained subdued, with competitive pressures preventing the full pass-through of previous rises in input costs.
The rate of consumer price inflation was reported to be unchanged.