United Kingdom economy lost steam in the first three months of the year, according to a major survey of businesses that showed domestic demand slipped for both services and manufacturing companies.
The British Chambers of Commerce’s (BCC) Quarterly Economic Survey follows a string of lacklustre data since the start of the year, with industrial output declining sharply and consumer confidence fading from highs seen last year.
Most of the BCC’s key gauges either stagnated or fell. While they still pointed to modest economic growth, the business group warned of potential downside risks.
Domestic sales growth for manufacturers receded to the lowest level since the end of 2012, and for services this was the weakest since mid-2013.
And while manufacturing exports picked up slightly, the BCC’s gauge of services exports slipped to its lowest since the end of 2011.
“From sales and orders to confidence and investment intentions, many of the business indicators we track are at a low ebb,” the BCC’s acting director general, Adam Marshall, said.
The BCC referred to “mounting global and domestic uncertainties” as reasons for the weaker outlook. It did not specifically mention Britain’s June 23 referendum on membership of the European Union.
Last month the BCC’s previous director general resigned after he breached the group’s neutral stance on the referendum and spoke in favour of a British exit from the EU.
The BCC survey of more than 8,500 companies, the largest of its kind, painted a mixed picture of Britain’s job market.
Pay pressures, a key determinant of policy for the Bank of England, eased overall.
Services companies that comprise the bulk of Britain’s private sector economy reported the greatest staff recruitment difficulties for 18 years.
And while services companies took on staff during the first quarter at the slowest pace in two years, the proportion of them looking to expand their workforce in the coming three months improved.
Companies rolled back their plans to increase spending on training and machinery, suggesting policymakers may be frustrated in their hopes for a recovery led more strongly by business investment.
A separate survey from credit card company Visa Europe suggested consumer demand, a pillar of Britain’s economic upturn since 2013, held up well during the first quarter.
Its inflation-adjusted gauge of consumer spending, based on card transactions data, rose 2.3 percent year-on-year in March, up slightly from 2.2 percent in February.