News

UK domestic demand drops in Q1

According to the latest figures released from the British Chambers of Commerce’s (BCC) Quarterly Economic Survey, domestic demand dropped for both manufacturing and services for the first three months of the year.

The survey, which is based on 8,500 responses from firms in the first quarter of 2016, suggests that growth in the UK economy continued to soften, with most key survey indicators either static or decreasing [1].

Domestic sales growth for manufacturers receded to the lowest level since the end of 2012 and, as for services, it was the weakest since mid-2013 [2].

While manufacturing exports picked up slightly, the BCC’s gauge of services exports slipped to its lowest since the end of 2011. Acting Director General, Dr Adam Marshall, said: “From sales and orders to confidence and investment intentions, many of the business indicators we track are at a low ebb” [2].

The BCC referred to “mounting global and domestic uncertainties” as reasons for the weaker outlook, although it did not specifically mention the upcoming EU referendum [2].

The survey also revealed the difficulties of recruiting staff, suggesting that pay could strengthen in the coming months, despite low inflation.

The BCC’s findings were resounded by a poll by BDO, in which business optimism stood at its lowest in more than two years in March [3].

Meanwhile, Visa Europe figures suggest that Britain’s recovery continues to be driven by higher consumer spending, which grew by 2.3% year-on-year in March, as households spent more on restaurant meals and going out [3].

Read the full report here.

 

[1] Market Business News. ‘UK domestic demand for manufacturing and services firms dropped in Q1’. marketbusinessnews.com

[2] Reuters UK. ‘UK economy lost steam in Q1, industry survey shows’. uk.reuters.com

[3] Telegraph. ‘Brexit fears hurting UK economy’. telegraph.co.uk