U.K. Growth Slowed in June for Most Sectors in Lloyds Survey
Britain’s growth slowed and inflation rose in most sectors of the economy in June, a widely-watched business survey showed, highlighting issues likely to weigh down the pace of recovery.
Lloyds Banking Group Plc said its survey of 1,500 companies showed the pace of expansion eased for nine of the 14 industries tracked. Transport, food and drink manufacturing, and household products were hardest hit, reflecting labor shortages and a shift in consumer preferences.
Most sectors were less optimistic about their potential over the next 12 months, an indication that the rapid growth companies enjoyed when lockdowns started loosening in April won’t continue. While Prime Minister Boris Johnson’s government ended most Covid-19 restrictions on Monday, a surge in infections is raising concerns that tighter rules may be needed, stifling the recovery.
“Infections rising sharply alongside intensifying price pressures and skilled labor shortages only adds to the reopening challenges facing U.K. businesses,” said Scott Barton, managing director of corporate and institutional coverage at Lloyds.
Every sector tracked by the survey conducted with IHS Markit reported a rise in input costs. Inflation for manufacturers surpassed the 29-year high recorded in May. All except one sector reported a bigger backlog in orders, with food and drink makers hit hard by staff shortages.
Hospitality gained at the fastest pace in nine years last month as more people went out to enjoy re-opened pubs and restaurants and European football championship games. Manufacturers of household goods eased as consumers shifted their spending outside the home. Demand for raw materials drove a sharp increase in the output in metals and mining.
“We are entering a new phase of the U.K.’s recovery,” said Jeavon Lolay, head of economics and market insight at Lloyds. “We are less likely to experience the rapid month-on-month output growth we’ve typically seen when businesses have been able restart operations after successive lockdowns.”
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