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13th May 2022
ONS data: Inflation concerns mount for businesses in May in another bleak snapshot
Trend
The Office for National Statistics(ONS) has released the latest data on economic activity and business concerns in the UK.
Hargreaves Lansdown comments:
"Hard on the heels of the deteriorating picture for the UK economy has come another bleak snapshot of the toll that rampant inflation is having on businesses large and small. The latest ONS data shows that soaring prices are now the main concerns for more than a quarter of UK businesses (26%). It’s clear the commodity chaos unleashed by the invasion of the Ukraine is spreading as back in late February just over a fifth of firms(21%) said it was the major worry. High energy costs are the big bugbear with 19% of companies questioned saying these were the major business concern. Businesses are now facing the double whammy of stubbornly high input costs and falling consumer confidence with the cost of living crisis set to bite harder.
These latest snapshots of the UK economy are like stills from a slow motion disaster movie we’ve already read the reviews on. We’ve been primed to expect a recession and that looks just where we are heading right now with costs continuing to mount for businesses following the deterioration in output in March, with overall GDP falling 0.1%. Consumer spending is already taking a hit even before the worst effects of the mounting cost-of-living crisis take hold. Retail sales fell 1.4% month on month with shoppers clearly being more conscious about their budgets, in the weeks before the energy price hikes in April landed. Motor vehicle sales have slumped as a combination of supply chain issues causing a lack of availability and caution returns over making ticket purchases. The uptick in the construction sector was a saving grace, but is likely to be short lived, given it was a short burst of activity following the disruption to sites Storm Eunice caused in February and other more recent readings from April appear to back up the grim warnings that a recession is looming. Last week’s S&P Global/CIPS PMI data showed that activity has slowed to the slowest pace so far this year and longer term growth expectations have slumped.
It’s likely that many businesses will respond by battening down the hatches and delaying non-essential expenditure, but other more cash-rich companies may accelerate digital transformation plans to try and find efficiencies across operations."’
Hargreaves Lansdown Trends(58 articles)
ONS Trends(7 articles)
