- Lloyds Bank: Seven of the fourteen British sectors saw new orders grow in December
- Real estate experienced the fastest increase in demand, with a score of 61.4
- The metals and mining sector and the software services sector also saw new orders rise
More than twice as many British industries reported rising demand last month as falling inflation and stable interest rates gave businesses and consumers more confidence.
According to the latest Lloyds Bank UK Sector Tracker, seven out of fourteen UK sectors saw new orders increase in December, up from three the month before.
Real estate witnessed the fastest increase in demand of any sector, with a score of 61.4, while mortgage rates fell. Any number above 50 indicates expansion.
New orders: More than twice as many UK industries reported rising demand last month as falling inflation and stable interest rates boosted consumer confidence
The metals and mining and software services sectors also saw significant increases in new orders, with the latter supported by greater business investment in technology services.
At the same time, the tourism and leisure sector, which includes hospitality companies, achieved their first demand growth in ten months.
Britain’s pubs, restaurants and bars have had a torrid four years due to a combination of pandemic-forced closures, rising energy prices and supply chain challenges.
The number of licensed properties fell below 100,000 for the first time last September, according to recent figures from the trade organization UKHospitality.
Annabel Finlay, director of food, drink and leisure at Lloyds Bank Commercial Banking, said the increase in sales was “very encouraging to see for a sector that has weathered so many challenges”.
Still, she warned: “However, uncertainty will persist into 2024, with discretionary spending still under pressure for many households.
‘The hospitality sector may also have to compete even more on wages to attract staff, which may increase pressure on margins.’
Volume from companies experiencing weak trading due to inflationary pressures also remains at high levels, which Lloyds says demonstrates the cautious attitude among consumers.
Even with the boost from Christmas spending, the number of companies blaming inflation for reducing sales was 4.24 times the long-term average in December.
The British consumer price index rose to 4 percent last month after a rise in alcohol and tobacco prices.
EY Item Club’s new winter forecast predicts inflation will reach the BOE’s 2 percent target in May and average 2.4 percent in 2024.
The report additionally said that Britain’s “prolonged period of economic stagnation should begin to fade” as price rises slow and interest rates and taxes fall.
Hywel Ball, chairman of EY UK, said: ‘While challenges remain, forecasts indicate that Britain’s period of economic stagnation is slowly coming to an end.
‘Business investment, which has been disappointing for some time, is also expected to rebound in the medium term.
“A modest contraction is forecast for 2024, but this should be followed by a rebound in capital spending in subsequent years.”