Global| Jan 20 2005UK's BCC Survey for Q4 Points to Slower Growth
Summary
UK businesses experienced less widespread gains in domestic (or "home") sales in Q4 than earlier in 2004, according to the quarterly survey of the British Chambers of Commerce ("BCC"). The UK economy experienced good growth from the [...]
UK businesses experienced less widespread gains in domestic (or "home") sales in Q4 than earlier in 2004, according to the quarterly survey of the British Chambers of Commerce ("BCC"). The UK economy experienced good growth from the middle of 2003 to the middle of 2004, but this survey hints that some slowing may be in process.
Manufacturers' sales conditions stood at +16 in Q4, down from +20 in Q3 and below the year's average of +19. These data are percent balance figures, the percentage of firms reporting sales gains less the percentage with sales declines. Manufacturers also report weaker employment, down at only +3 in Q4. However, several items in the survey showed more strength, export sales in particular, which picked up to +20 from +12. Profitability expectations also firmed, although these tend to be steadier and more optimistic than other survey items. 
The service sector -- almost five times larger than manufacturing in terms of value added -- saw roughly the same pattern of activity. Domestic sales gains edged down from +30 to +29 in the quarter and orders eased from +23 to +21. However, employment in that sector looks better, advancing from +18 to +20. Export sales and orders both firmed, and profit expectations gained 6 percentage points. These last, however, remain lower than earlier in 2004.
This is an interesting survey, including a number of descriptive items: among others, employment expectations as well as current levels of employment and the characteristics of recruitment that follow from those expectations. Further, as noted in the two graphs here, the domestic sales measures in both the manufacturing and service sectors correspond well to year-on-year growth patterns in the national accounts "value added" data, with the highest correlations for a one-quarter lead-time in the BCC series. In manufacturing the correlation ratio is 73% and in services it is 83%. Thus, these survey results would bear consideration by business planners and government policymakers alike. Obviously, the high correlation ratios don't guarantee a specific outturn in value-added growth, but they do suggest that continued slowing in UK growth must be deemed a reasonable contingency.
| % Balance | Q4 2004 | Q3 2004 | Q2 2004 | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Manufacturing | ||||||
| "Home" Sales | 16 | 20 | 21 | 19 | 7 | 14 |
| Export Sales | 20 | 12 | 15 | 17 | 4 | 6 |
| Employment | 3 | 19 | 10 | 12 | -3 | 2 |
| Profitability Confidence | 35 | 24 | 35 | 33 | 32 | 33 |
| Services | ||||||
| "Home" Sales | 29 | 30 | 38 | 32 | 21 | 24 |
| Export Sales | 17 | 13 | 11 | 12 | 1 | 5 |
| Employment | 21 | 18 | 20 | 19 | 9 | 13 |
| Profitability Confidence | 41 | 35 | 47 | 43 | 37 | 41 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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