BOE Agents report says activity growth steady but at modest pace

Author: Mike Paterson | Category: Central Banks

Latest BoE Agents' Summary Of Business Conditions now out 14 Feb

  • service firms report a pickup in growth
  • good exports volumes strengthened
  • construction output growth had continued to slow.
  • recruitment difficulties had remained at an elevated level, and pay growth had picked up.
  • investment intentions remain positive but mainly reflected investment to maintain business activity
So that's maintain rather than expand as Brexit concerns continue to impact. Not exactly the rip-roaring report the BOE would have us believe judging by their comments last week.

GBPUSD currently lower at 1.3860 with EURGBP pushing higher to test 0.8920 and GBPJPY in retreat once more at 148.96

Here's more from the BOE report:
  • Consumer spending growth had changed little.Growth in retail sales values had been broadly steady, but within that there was downward pressure on sales of furniture and homewares. In addition, the market for new cars remained challenging. Consumer services turnover growth continued to be helped by strong growth in inbound tourist spending, though there were some signs of a softening in discretionary spend by domestic consumers
  • Growth in business services turnover had picked up slightly, but remained moderate Growth was supported by an increase in mergers and acquisitions activity, property transactions, and continuing strength in overseas demand for professional services. Spending on IT services also remained strong.
  • Manufacturing output growth had remained moderate .Export volumes growth had increased, supported by strong global demand and the fall in sterling. The latter had led to some, albeit still limited, switching from overseas to cheaper, domestically produced goods. Activity in the oil and gas sector had picked up.
  • Construction output growth had eased with growth in housebuilding offset by flat or falling activity in other parts of the sector.
  • Investment intentions remained positive  but mainly reflected the investment needed to maintain business activity and improve efficiency. This included investment in automation, artificial intelligence and robotics.
  • Finance remained readily available, particularly for medium-sized and larger corporates, though banks' risk appetite towards construction and retail had fallen slightly. Provision of trade credit insurance had tightened for some firms in these sectors. Insolvencies had increased, albeit from a very low base, and there were reports of strains in payment along supply chains, particularly in construction and retail.
  • Outside London, investor demand for UK commercial real estate remained broadly unchanged, with demand modestly above supply. There was strong demand for distribution space, while demand for non-prime retail property had softened. Investor sentiment remained comparatively weaker in London, weighed by concerns about stretched property valuations.
  • Housing market activity remained subdued with transactions steady at a low level, reflecting weak supply and demand. Within that, the new-build and rental sectors were buoyant, pushing up prices and rents. Housing demand was particularly weak in London and the South East, especially for the most expensive properties. The rise in Bank Rate had little discernible impact on demand as mortgages remained cheap and readily available.
  • Overall capacity utilisation held steady at a slightly higher level than normal, particularly in services. Companies cited labour availability as one of the main constraints to activity.
  • Employment intentions continued to point towards modest headcount growth, except in consumer services, where headcount was expected to continue falling. Recruitment difficulties remained at elevated level
Full report along with some pretty graphs to pad it all out here