Agents’ summary of business conditions – 2019 Q1 – Bank of England

Consumer demand

Growth in the value of retail sales weakened, as uncertainty about Brexit and the wider economy weighed on spending.

Business and financial services

Business and financial services activity slowed a little, reflecting caution in the run-up to Brexit and wider economic and political uncertainty.

 

Exports of services

Growth in exports of services slowed, in part due to weaker demand for consultancy services.

 

Manufacturing

Growth in domestic manufacturing output slowed. This reflected a fall in output in the automotive sector and weaker construction output growth, which was only partially offset by growth generated by stockbuilding. The latest Agents’ survey on preparations for EU withdrawal showed that around two fifths of all respondents have been building inventories (Box 1).

Weaker demand from Europe and China weighed on growth in exports of manufactured goods, with the Agents’ score for this measure falling to its lowest level in more than two years.

Construction

Construction output growth eased as weakening housing market conditions and business investment weighed on activity.

Investment

Investment intentions fell sharply in manufacturing, mostly due to Brexit uncertainty. There was a modest decline in investment intentions in the services sector.

Corporate financing conditions

Demand for credit from corporates softened. Credit availability tightened a little, particularly for contacts in the retail and construction sectors.

Property markets

There was slower demand for commercial real estate from both domestic and overseas investors, but demand continued to outweigh supply.

Housing market activity weakened for new-build homes as well as for second-hand properties, but the rental market remained buoyant.

Capacity utilisation

Capacity constraints remained above normal, particularly in the logistics sector, partly due to stockpiling activity.

Employment and pay

Recruitment difficulties continued to intensify and remained widespread. Employment intentions weakened a little, however, and pay growth appeared to be levelling off.

Costs and prices

Consumer goods price inflation slowed sharply but consumer services price inflation moderated less, partly due to wage-driven price increases in some sectors.