UK business outlook weakens
UK business confidence waned over the autumn, according to the latest Markit Business Outlook Survey. Expectations have moderated in the service and manufacturing sectors, although construction firms are optimistic regarding projected activity levels.
A net balance of +50% of firms across the manufacturing, service and construction sectors expect activity levels to rise over the next 12 months – the lowest figure since +46% in February 2013. By sector, services has the weakest outlook (+48%, lowest since February 2013), followed by construction (+55%, highest since June 2014) and manufacturing (+57%, lowest since October 2012).
However, the UK retains the brightest outlook among the major economies, with expectations underpinned by confidence in the UK economy, partly linked to an ongoing improvement in the property market, as well as attempts to grow export markets. Companies frequently mention targeted marketing campaigns and new product lines, as well as investment in business capacity.
Trevor Balchin, senior economist at Markit, comments: “The UK outlook has dimmed somewhat compared to the highs experienced through 2014 and the first half of 2015. A global economic slowdown linked to the malaise in China, vulnerable emerging markets in general and a lacklustre euro area recovery have weighed on firms’ expectations, despite ongoing confidence in the domestic economy. The strong pound and uncertainty over EU membership have also been cited as threats to growth.
“That said, when viewed in context of the past six years, the latest expectations data signal that the UK is set for solid overall growth next year. Moreover, it has again topped the global survey rankings with a more positive outlook than all the other major advanced and emerging economies monitored.”