Half of UK business sectors are enjoying increased demand

More than twice as many UK industries reported rising demand last month as falling inflation and steady interest rates gave businesses and consumers more confidence.

Seven out of 14 UK sectors saw new orders rise in December, compared with three the previous month, according to the latest Lloyds Bank UK Sector Tracker.

Property saw the fastest rise in demand of any sector, with a score of 61.4, as mortgage rates eased. Any number above 50 indicates expansion.

New orders: More than twice as many UK industries reported rising demand last month as falling inflation and steady interest rates boosted consumer confidence

The metals and mining and software services sectors also saw significant increases in new business, with the latter supported by higher business investment in technology services.

At the same time, the tourism and recreation industry, which covers hospitality companies, achieved the first increase in demand in ten months.

Britain’s pubs, restaurants and bars have endured a torturous four years due to a combination of pandemic closures, soaring energy prices and supply chain problems.

The number of licensed premises fell below 100,000 for the first time last September, recent figures from trade body UKHospitality showed.

Annabel Finlay, managing director of food, drink and leisure at Lloyds Bank Commercial Banking, said the rise in sales was «most encouraging in a sector that has weathered so many challenges».

Still, she warned: “However, uncertainty will persist throughout 2024, with discretionary spending still squeezed in many households.

«The hospitality industry may also have to compete even more on wages to attract employees, potentially increasing pressure on margins.»

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Volume from companies trading weak due to inflationary pressures also remains at high levels, which Lloyds says demonstrates a cautious attitude among consumers.

Despite the increase in Christmas spending, the number of companies that blame inflation for the decline in sales was 4.24 times the long-term average in December.

The UK consumer price index rose 4 per cent last month after a jump in alcohol and tobacco prices.

The new EY Item Club Winter Forecast predicts that inflation will reach the BOE’s 2% target rate in May and average 2.4 percent in 2024.

She went on to say that the UK’s «long period of economic stagnation should begin to ease» as prices rise slowly and interest rates and taxes fall.

Hywel Ball, UK chairman of EY, said: “While challenges remain, the forecast suggests that the UK’s period of economic stagnation is slowly coming to an end.

“Business investment, which has been disappointing for some time, is also expected to pick up in the medium term.

«A slight decline is forecast for 2024, but this should be followed by a recovery in capital spending in subsequent years.»

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