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In Focus Commercial Credit
UK recovery accelerates as supply chain pressures ease
A major piece of research shows that economic progress was made at the start of the year, but infl ation remains a concern
The number of UK sectors reporting output growth rose in January as supply conditions improved, according to the latest Lloyds Bank UK Recovery Tracker. However, businesses continued to face
signifi cant cost infl ation, which translated into a record uptick in selling prices among service sector fi rms. The number of UK sectors monitored
by the Tracker reporting output growth increased in January to 11 out of 14, up from 10 in December, and the highest number since October 2021. UK chemicals manufacturers registered the fastest output growth of any sector monitored (66.9) due to a solid increase in new orders, after contracting in December (48.5). A reading above 50 signals output is rising, while a reading below 50 indicates contraction. Meanwhile, fewer supplier delays helped
automotive manufacturers’ output increase at the fastest rate in seven months (55.5 in January vs. 49.6 in December). Strong growth in the sector led to the fi rst fall in backlogs of work for automotive and auto parts manufacturers since February 2021.
Tourism and recreation – which includes
Higher wages, energy bills and transport costs were evident as drivers of infl ation across the entire UK economy in January. However, the latest Recovery Tracker pointed to diverging infl ationary trends between manufacturers and services fi rms
A number of service sub-sectors also saw
strong growth, including real estate (61.3 vs. 54.2) and industrial services (60.3 vs. 53.7) as demand was boosted by hopes that the UK economy will continue its recovery in 2022. Concern over the Omicron variant and
Plan B restrictions, which remained in place for the majority of January in England, hampered activity for consumer-facing fi rms.
pubs, hotels, restaurants and leisure facilities – continued to see output contract for a second month in a row (43.1 in January vs 43.2 in December). UK transportation – which includes
airlines, hauliers and rail operators – fell for the fi rst time in fi ve months to register its weakest performance since August 2021 amid a renewed drop in passenger demand (49.0 vs. 54.3).
Goods infl ation softens, but service prices rise at unprecedented rate Higher wages, energy bills and transport costs were evident as drivers of infl ation across the entire UK economy in January. However, the latest Recovery Tracker pointed to diverging infl ationary trends between manufacturers and services fi rms. The UK Recovery Tracker pointed to
further improvement in supply conditions in January, including private-sector material shortages falling to a 10-month low. These improvements helped every UK manufacturing sector, except household
18
www.CCRMagazine.com
March 2022
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