Monthly Decision Maker Panel data - February 2023

The February DMP survey was conducted between 3 and 17 February and received 2,462 responses.

Businesses’ expectations for their own-price inflation declined in February. Over the next year, businesses expected their output prices to increase by an average 5.4%, down 0.4% from the previous month.  The three-month average fell from 5.8% to 5.6%. Note that the DMP covers own prices from firms across the whole economy, not just consumer-facing firms.

In February, CPI inflation expectations also fell. DMP members’ one-year ahead CPI inflation expectations decreased to 5.9%, down from 6.4% in January. Three-year ahead CPI inflation expectations also declined to 3.4% in February, from 3.7% in January.

Cost pressures continued to soften in February. Businesses reported that unit costs had grown by 9.8% in the year to February, down from 9.9% in January. Unit costs were expected to be to grow by a further 7.0% over the coming year, down from 8.0% in January.

Expected year-ahead wage growth remained at 5.7% in February. Realised annual wage growth ticked back up to 6.6% in February.

Recruitment difficulties started to rise again in February, with 45% of firms were finding recruitment ‘much harder’ than usual.  That represents an increase from 35% in January. Supply chain disruptions were also reported to have ticked up in February. Around 11% of firms’ non-labour inputs were disrupted in February, up from 9% in January.

In spite of ongoing recruitment challenges, realised employment growth remained strong at 4.3% in the three months to February, although the single month February data were weaker at 3.3%. Moreover, expectations for year-ahead employment growth rose in February, with the single month data rising from 1.2% to 2.7%, and the three-month average increasing from 1.5% to 1.9%.

Overall business uncertainty continued to decline in February, with 53% of firms reporting that the overall level of uncertainty facing their business was high or very high, down from 57% last month. Uncertainty around the outlook for businesses’ expectations for their own-price growth also fell back, although it remains at historically high levels.

The DMP was set up in August 2016 by the Bank of England together with academics from Stanford University and the University of Nottingham. It was designed to be representative of the population of UK businesses. All results are weighted. See Bloom et al (2017) for more details.

The DMP receives funding from the Economic and Social Research Council.