The most recent CBI Services Sector Survey suggests that service sector businesses are still running at below normal levels but less than in the previous quarter. Pressure on profits and deflation are not helping.
Business and professional services' volumes and values both increased slightly for the first time since May 2008 and many firms expect it to continue to increase over the next three months. However they remain below normal for the seventh consecutive quarter. Profitability suffered because of lower prices, which are expected to fall further over the next three months as competition for business continues, but may increase slightly over the coming quarter. Employment also fell again for the fifth successive quarter but less steeply than earlier in the year. Business and professional services are more optimistic than they have been for a long time.
Consumer services values and volumes fell slightly but at much slower rates than the previous three quarters. Over the next three months firms expect values to stabilise and volumes to decline. Optimism is not as strong as three months ago. Profitability in consumer services also suffered from lower prices which are also expected to continue to fall over the next quarter. Employment in consumer services was stable.
Service sector activity was less weak than in recent quarters and things may be beginning to look a bit better.
Friday, 28 August 2009
Thursday, 27 August 2009
Retailers Less Pessimistic About Future
The CBI Distributive Trades Survey shows high street sales falling for the fourth month in a row in the year to August. Running down stocks has left many businesses with a level that is just about adequate but job cuts could be heavier than in May. Most retailers reported a fall in retail sales and a further fall is predicted for September. Sales for the time of year are also reported to be weak. Retailers continue to cut their orders with their suppliers at an even faster rate than in previous months. More jobs may also go before September. Price inflation continues to rise. However, business confidence is improving with many people in business feeling less pessimistic about the general business situation than the last quarter.
Retail Sales Up
The seasonally adjusted value of retail sales rose by 2.6% compared with July 2008. Food stores were 5.2% higher while non-food stores were 0.6% lower. Non-store retailing and repair sector was 10.8% up on last year.
The volume of retail sales rose by 3.3% compared with July 2008 and 1.6% on the quarter. Food stores were up by 2% and non-food stores by 3.4%. Non-store retailing and repair was 12.9% up on last year.
Prices were 0.7% lower than July 2009 driven mainly by non-food stores. The value of Internet sales in July was £178.3m or 3.3% of total retail sales. The total of retail sales was an estimated £21.9bn and average weekly sales in July was £5.5bn. Figures from ONS.
The volume of retail sales rose by 3.3% compared with July 2008 and 1.6% on the quarter. Food stores were up by 2% and non-food stores by 3.4%. Non-store retailing and repair was 12.9% up on last year.
Prices were 0.7% lower than July 2009 driven mainly by non-food stores. The value of Internet sales in July was £178.3m or 3.3% of total retail sales. The total of retail sales was an estimated £21.9bn and average weekly sales in July was £5.5bn. Figures from ONS.
Government Receipts Down, Spending On Target
The latest public sector finances statistics from the ONS show that in July the public sector had a current budget deficit of £5.1bn and net borrowing of £8bn. At the end of July net debt was £800.8bn or 56.8% of GDP.
The public sector current deficit is £13bn higher than last year when there was a surplus of £7.8bn and the net borrowing is £13.2bn higher than last year when the public sector was lending net of £5.2bn. Latest figures for net debt without financial sector intervention are for June when net debt was £658.1 or 46.6% of GDP. Whereas last year the public sector made a repayment of £14.5bn the net cash requirement for July this year was £0.2bn an increase of £14.7bn. Comparing the net debt shows that last year the net debt was 43.5% of GDP at £627.2bn.
Government receipts were 15.3% lower than the same month last year and government spending was 7.5% higher. Net investment was £2.9bn compared with £2.6bn last year. The Institute of Fiscal Studies said that receipts of Corporation Tax and VAT collapsed to two-thirds of their July 2008 level more than the Treasury predicted in the Budget over the year. Spending is increasing as predicted. They also add that there are good reasons to expect a better performance in revenues over the next few months. The reversal of the VAT cut scheduled for the end of 2009 is one of them.
The public sector current deficit is £13bn higher than last year when there was a surplus of £7.8bn and the net borrowing is £13.2bn higher than last year when the public sector was lending net of £5.2bn. Latest figures for net debt without financial sector intervention are for June when net debt was £658.1 or 46.6% of GDP. Whereas last year the public sector made a repayment of £14.5bn the net cash requirement for July this year was £0.2bn an increase of £14.7bn. Comparing the net debt shows that last year the net debt was 43.5% of GDP at £627.2bn.
Government receipts were 15.3% lower than the same month last year and government spending was 7.5% higher. Net investment was £2.9bn compared with £2.6bn last year. The Institute of Fiscal Studies said that receipts of Corporation Tax and VAT collapsed to two-thirds of their July 2008 level more than the Treasury predicted in the Budget over the year. Spending is increasing as predicted. They also add that there are good reasons to expect a better performance in revenues over the next few months. The reversal of the VAT cut scheduled for the end of 2009 is one of them.
Thursday, 20 August 2009
Manufacturers Outlook Getting Brighter
The outlook for manufacturing is the least negative since June 2008 following months of destocking. Only a slight majority of UK manufacturers in the latest CBI Industrial Trends survey expect the volume of output to decrease in the next three months. However demand remains very weak with a majority of manufacturers reporting total order books still below normal for the seventh consecutive month. Export orders are also weak despite the weaker pound.
Wednesday, 19 August 2009
Food Helps CPI Rate Stay The Same
The CPI rate of inflation rose by 1.8% the same amount as in June with the index at 110.9 compared with 111.0 in June. The RPI fell by 1.4% over the same period compared with a fall of 1.6% to June. The RPIX rose by 1.2% from 1.0% in June.
The largest contribution to the downward trend cam from food and non-alcoholic beverages. Meat prices are falling this year but were rising a year ago across a range of products. vegetables also contributed a large downward effect and bread and cereals a smaller effect. Other downward effects came from hotels and retaurants, particularly restaurants and cafes and especially take-aways and accomodation services. Housing and household services alse feature due to fuel costs. Within this grouping regular maintenance and repairs had an effect offsetting and upward effect from rents.
Recreation and culture provided the biggest upward contribution mainly games, toys and hobbies but with small effect from an increase in the prices of computer games and DVDs. Small price rises in alcoholic beverages andf tobacco also contributed a small increase.
Motoring expenditure made the biggest upward contribution to the RPI. Car prices rose this year compared to last and tax and insurance premiums also rose by more than last year. A large downward contribution from petrol and oil helped offset these effects where prices rose more slowly than last year. Other large downward contributions came from fuel and light, fares and other travel costs. Large upward contributions came from household goods, housing, household services and leisure goods.
The largest contribution to the downward trend cam from food and non-alcoholic beverages. Meat prices are falling this year but were rising a year ago across a range of products. vegetables also contributed a large downward effect and bread and cereals a smaller effect. Other downward effects came from hotels and retaurants, particularly restaurants and cafes and especially take-aways and accomodation services. Housing and household services alse feature due to fuel costs. Within this grouping regular maintenance and repairs had an effect offsetting and upward effect from rents.
Recreation and culture provided the biggest upward contribution mainly games, toys and hobbies but with small effect from an increase in the prices of computer games and DVDs. Small price rises in alcoholic beverages andf tobacco also contributed a small increase.
Motoring expenditure made the biggest upward contribution to the RPI. Car prices rose this year compared to last and tax and insurance premiums also rose by more than last year. A large downward contribution from petrol and oil helped offset these effects where prices rose more slowly than last year. Other large downward contributions came from fuel and light, fares and other travel costs. Large upward contributions came from household goods, housing, household services and leisure goods.
Thursday, 13 August 2009
Unemployment Up To New Record
The latest labour market survey from the Office for National Statistics shows that the unemployment rate the number of unemployed and the claimant count have all risen. The rate has gone up to 7.8%, the numer of unemployed to 2.43 million and the claimant count to 1.58 million. The rate of economic inactivity has gone up to 21%, the number of economically inactive people to June was 7.95 million, 3.27 million of them were men and 4.69 million of them women.
The number of vacancies has gone down by 26,000 to 427,000 to July which means 1.6 vacancies for every 100 employee jobs. There were 277,000 redundancies in the three months to June.
The number of vacancies has gone down by 26,000 to 427,000 to July which means 1.6 vacancies for every 100 employee jobs. There were 277,000 redundancies in the three months to June.
Thursday, 6 August 2009
Exports To Lead Growth Next Month
Medium sized firms are reporting an increase in confidence for the first time since April 2007. They are expecting a growth in orders despite a marked fall in the volume of total new orders in July. Export orders also continue to decline but again firms are increasingly optimistic about exports. As with orders, so output is also slowing, but the optimism about exports includes leading a return to growth in the next quarter.
The quarterly CBI report on SMEs says that business remains difficult but although the indications are that business is still falling it will improve over the next three months. The position of the pound has not made much difference to small and medium sized businesses and their exports but they are responding to improved credit conditions. Firms are still running down stocks and working below capacity.
The quarterly CBI report on SMEs says that business remains difficult but although the indications are that business is still falling it will improve over the next three months. The position of the pound has not made much difference to small and medium sized businesses and their exports but they are responding to improved credit conditions. Firms are still running down stocks and working below capacity.
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