Bank of England

Thursday, June 28, 2018 - 05:22

MNI: BOE Agents: Headcount Seen Falling In Consumer Sector


By David Robinson

LONDON (MNI) - A Bank of England agents report, published Thursday, found that consumer facing sectors were set to lower their headcount, with the retail sector looking at the most striking job losses.

UK employment growth had hit record high levels but the BOE agents report for the second quarter points to a downturn with a shrinkage in jobs in the labour intense retail sector. The survey painted a picture of subdued overall growth in Q2, with growth in consumer services slowing and the construction sector failing to make up all the ground it lost in the first quarter as a result of the bad weather.

The decline in retail employment is, at least in part, a result of structural changes caused by high street store closures.

"Employment intentions in consumer-facing sectors had weakened further, indicating contracting headcount. This primarily reflected job cuts in retail on the back of store closures and rationalisation of management and support roles," the agents report said.

Consumer services employment intentions fell to -0.9 on the agents scores for June from -0.5 in April, taking it back to a level last seen in November 2009.

--BUSINESS SERVICES

Business services and manufacturing looked set to see modest employment growth. The agents found evidence of widespread recruitment difficulties and in some cases these were restricting jobs growth, with most acute labour shortages in information technology, construction and engineering.

Pay settlements ticked up to average 2.5 to 3.5%, up from the 2% norm in recent years. The introduction of the National Living Wage was cited as the key factor behind higher consumer services pay growth.

--BREXIT SEEN AS MODEST NEGATIVE

The BOE also released its quarterly Decision Maker Panel (DMP) results. The DMP is a large scale survey of chief financial officers designed to capture the likely impact of Brexit.

It found that business representatives were, on average, expecting a modest, but more negative, effect from Brexit. Extrapolating from the results the reports authors estimated that the expected negative impact of Brexit on sales had risen to 3% from just over 2%.

Brexit was cited as one of the three top sources of uncertainty by 37% of respondents and the authors estimated on a simple regression to have lower business investment by 3 to 4 percentage points in the year to mid-2017. The evidence is that the effect of Brexit on investment has not got any larger since then but nor has it unwound.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: M$B$$$,M$E$$$,M$$BE$]

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