Number of sectors growing steady in Nov, but growth slowed and prices rose
The number of growing UK sectors held steady in November, according to the latest Lloyds UK Sector Tracker.
Six of the 14 UK sectors monitored reported output growth, the same number as October, albeit four of the six sectors grew at a slower rate than the month before.
Four sectors – food and drink manufacturing (56.0), commercial and professional services (52.4), software services (53.0) and real estate (51.1) – increased their headcount. This is the same number as in October, but half of the September total, when eight sectors increased hiring. A reading on the Tracker above 50.0 indicates expansion, while a reading below 50.0 indicates contraction.
The number of sectors with growing demand, as measured by new orders, fell by one (four in November vs. five in October).
Costs rise, as future output expectations fall
In November, all 14 sectors monitored reported rising costs (up from 12 in October), with ten seeing costs rise at a faster rate than the month before (vs. four in October). 12 sectors increased the prices they charged to customers – the same number as the month before.
The tourism and recreation sector, which includes pubs, hotels and restaurants, saw their costs increase at the sharpest rate (67.5 vs. 66.3 in October), and also raised their prices at the fastest rate (57.8 vs. 57.0 in October).
Firms’ future output expectations dropped to the lowest level since December 2022. 11 out of 14 sectors saw a fall in confidence with just two sectors reporting expectations that were above long-run trends. The number of businesses citing the potential impact of future inflationary pressures on their activity rose to more than nine times the long-term average (9.23 in November vs. 3.45 in October).
Nikesh Sawjani, senior UK economist at Lloyds, said: “The softening in output expectation and rise in inflationary concerns is a reflection of the headwinds that businesses are facing into currently. As we reach the end of 2024, businesses are already planning and preparing for what they hope will be a strong start to the New Year.”
Sector demand and output growth
Output growth: Financial services (53.2), real estate (52.6), software and services (52.3), food and drink manufacturing (51.3), commercial and professional services (50.7) and automobiles and auto parts (50.1)
Output contraction: Tourism and recreation (49.3), transportation (48.2), industrial goods manufacturing (47.9), chemicals manufacturing (44.9), technology equipment manufacturing (43.0), household products manufacturing (42.7), metals and mining (42.3) and healthcare (40.8)
Growing demand, as measured by new orders: Financial services (56.5), real estate (55.7), software services (54.6) and technology equipment manufacturing (51.5)
Contracting demand, as measured by new orders: Household products manufacturing (49.6), commercial and professional services (49.0), food and drink manufacturing (48.7), transportation (46.8), industrial goods manufacturing (46.0), tourism and recreation (45.2), chemicals manufacturing (45.2), metals and mining (40.2), healthcare (39.9) and automobiles and auto parts manufacturing (38.4)
