MNI: BOE Agents: Headcount Seen Falling In Consumer Sector

By David Robinson

     LONDON (MNI) - A Bank of England agents report, published Thursday, found

that consumer facing sectors were set to lower their headcount, with the retail

sector looking at the most striking job losses.

     UK employment growth had hit record high levels but the BOE agents report

for the second quarter points to a downturn with a shrinkage in jobs in the

labour intense retail sector. The survey painted a picture of subdued overall

growth in Q2, with growth in consumer services slowing and the construction

sector failing to make up all the ground it lost in the first quarter as a

result of the bad weather.

     The decline in retail employment is, at least in part, a result of

structural changes caused by high street store closures.

     "Employment intentions in consumer-facing sectors had weakened further,

indicating contracting headcount. This primarily reflected job cuts in retail on

the back of store closures and rationalisation of management and support roles,"

the agents report said.

     Consumer services employment intentions fell to -0.9 on the agents scores

for June from -0.5 in April, taking it back to a level last seen in November

2009.

     --BUSINESS SERVICES

     Business services and manufacturing looked set to see modest employment

growth. The agents found evidence of widespread recruitment difficulties and in

some cases these were restricting jobs growth, with most acute labour shortages

in information technology, construction and engineering.

     Pay settlements ticked up to average 2.5 to 3.5%, up from the 2% norm in

recent years. The introduction of the National Living Wage was cited as the key

factor behind higher consumer services pay growth.

     --BREXIT SEEN AS MODEST NEGATIVE

     The BOE also released its quarterly Decision Maker Panel (DMP) results. The

DMP is a large scale survey of chief financial officers designed to capture the

likely impact of Brexit.

     It found that business representatives were, on average, expecting a

modest, but more negative, effect from Brexit. Extrapolating from the results

the reports authors estimated that the expected negative impact of Brexit on

sales had risen to 3% from just over 2%.

     Brexit was cited as one of the three top sources of uncertainty by 37% of

respondents and the authors estimated on a simple regression to have lower

business investment by 3 to 4 percentage points in the year to mid-2017. The

evidence is that the effect of Brexit on investment has not got any larger since

then but nor has it unwound. 

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: M$B$$$,M$E$$$,M$$BE$]