Firms and consumers reign in spending but BoE survey sees manufacturers gain
Business services growth and consumer spending softened last month due to a combination of the Brexit vote and wet weather, a survey by the Bank of England found, though there were no indications of rising unemployment or lower investment in absolute terms.
The BoE's August regional agents' survey, which was conducted between late June and late July, reported that the slowdown in manufacturing export volumes had been arrested, partly thanks to the slump in the pound since the EU referendum.
The Agents' Summary of Business Conditions report, some of which was included in the BoE's quarterly Inflation Report last week, found business services growth had softened further during July, partly due to weakness in commercial property investment and corporate transactions.
"Consumer spending growth had also slowed, although that appeared to have partly reflected the effects of unusually wet weather," the report added, but noted signs of increased "consumer caution" and weaker demand for big-ticket items.
The survey, which is collated based on meetings between the BoE's regional agents and business contacts between late June and late July, indicated "the result of the EU referendum would have a negative effect, overall, on capital spending, hiring and turnover over the coming year".
Half of the companies surveyed said they would ease back on recruiting plans over the next year, while 60% said they were now planning to spend less.
While indications of employment and investment intentions had weakened in absolute terms, this pointed to expectations of "little change" in staff numbers and capital spending over the coming six to twelve months."
"Most businesses were not making immediate changes to capital spending plans, but a significant minority were reviewing their risk appetite and some were deferring decisions," the Bank said.