MNI: BOE Agents Report Highlights Consumer Services Weakness

By David Robinson

     LONDON (MNI) - The latest Bank of England Agents Report highlighted the

softness in the UK consumer services, with both recruitment and growth in the

sector low. 

     The updated May Agents Report painted a picture of subdued overall growth,

with companies facing hiring difficulties and the consumer sector hardest hit.

     "Recruitment difficulties had broadened across skills and sectors, which

was reported to be partly due to reduced availability of EU migrant workers.

Employment intentions had ticked up in manufacturing but remained weak in

consumer services, due to higher labour costs and weak sales," the agents report

said.

     Investment intentions overall were reported to be modest, with business

services and manufacturing sector firms planning to raise investment but

consumer services firms investment plans again weak.

     Labour cost growth nudged higher, reflecting a mix of slightly higher pay

settlements and rising non-wage costs as a result of the rollout of pensions

auto-enrolment. The agents say pay awards were typically in a 2.5% to 3.5%

range.

     --INFLATION EASING

     Pressure on headline inflation has eased due to the waning effects of past

sterling depreciation, although agents said this was being offset by rising

global commodity prices.

     The agents scores showed investment intentions for manufacturing in April

holding steady at 1.5 while in services the score fell to 0.9 from 1.0 in

February.

     Total labour costs per employee were unchanged at 2.1 for manufacturing in

April and rose to 2.3 for services from 2.1 in April against February. Services

business intentions fell to 0.3 from 0.4 but rose to 0.7 from 0.6 in

manufacturing.

     The Agents Report is based on the Bank's regional agents collecting

responses from local business and compiling them into a rolling survey which is

available for policymakers and is published once a month, with scores reflecting

net rises and falls in the various categories.

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

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