Exporters thrive as consumer businesses struggle, BoE finds
Manufacturers of exported goods continued to thrive while consumer businesses languished in the doldrums in the first quarter, a Bank of England survey showed.
Growth in exports of manufactured goods was strong, supported by more global activity and the weaker pound, the BoE’s agents reported. Investment intentions rose in manufacturing as exporters sought to meet overseas demand. Some domestic producers, including in soft furnishings and brewing, gained from customers switching from imported goods.
Demand from the EU strengthened with little sign of customers switching from UK suppliers, though long-term contracts may be the reason for this, the BoE said. Overall, manufacturing growth eased slightly.
UK exporters of manufactured goods have gained from surprisingly strong global growth and more competitive prices as a result of sterling’s post Brexit decline. But retail and consumer services companies have felt the opposite effect as Britain’s growth has failed to match those of other developed economies and the weak pound has pushed up prices of imported goods.
Growth in retail sales values slowed, particularly for white goods and homewares, according to the BoE’s survey of businesses from late December to late February. The BoE said the slowdown was probably caused by low turnover in the housing market, early purchases in the pre-Christmas Black Friday sales and squeezed household incomes.
Store-based retailers suffered as consumers shopped online more, putting some bricks and mortar retailers at risk of failure. Budget retailers did well and, though consumer services spending held up, some parts of the market struggled such as casual dining.
The BoE’s findings for consumer businesses reflect difficulties for companies such as Next, Moss Bros and Maplin, which went into administration in January. Restaurant chains such as Jamie’s Italian, Prezzo and Byron have been forced to restructure after suffering from intense competition and consumer weakness.
Employment intentions were little changed overall though business services had picked up while consumer services weakened as retailers cut costs.