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Businesses were largely taken by surprise by last month’s vote to leave the EU and few had contingency plans in place. According to the Bank of England’s agents, who report on activity in the regions, most are maintaining an attitude of “business as usual” for now. Over the next year, however, a third of businesses expect Brexit to have a negative effect on investment and hiring plans as the economic mood in the UK darkens.

So far there is little evidence of companies moving operations out of the UK though several businesses reported that they were considering doing so.

Among businesses that are worried about hiring, there is also considerable concern about the potential loss of eastern European labour among employers who rely on it.

Consumer spending on services and non-durable goods appears to have held up and activity in the housing market has been more resilient than some of the BoE’s contacts had expected. But consumer spending will be sensitive to falls in disposable income, which are expected as the recent depreciation of sterling feeds through into higher prices.

In expectation of these sorts of change in behaviour, many economists have revised down their forecasts for UK growth, by an average of 0.3 percentage points for this year, and 0.6 percentage points next year, according to a summary published by the Treasury on Wednesday.

Housing market

Economic slowdowns are usually associated with a sharp contraction in the housing market as people hold back on making big financial decisions. Indeed, new buyer inquiries declined significantly across the UK following the referendum, according to a survey of estate agents and surveyors by the Royal Institution of Chartered Surveyors. A large majority of agents believe house prices will fall over the next three months.

LonRes, a research firm, also reports that completions on central London homes were down 43 per cent after the referendum compared with a year earlier.

But Rightmove, the property website, paints a brighter picture with buyer inquiries in the two weeks since the Brexit vote at a similar level as the same time in 2014, although lower than in 2015 when it says demand was boosted by the unexpected Conservative election victory.

● Signal for growth

● Reason to be cautious
House purchases are about confidence — it is a market that can quickly change so more data are needed before a clear trend is established.

Investment intentions

Business investment is crucial to maintaining spending in the wider economy — unfortunately, it is also most prone to swings in sentiment. The BoE’s agents regularly monitor investment intentions in the manufacturing and service industries, summarised in a monthly score.

The June figures, published on Wednesday, show that manufacturing investment intentions remained at the same level in June as in May, at 0.4 — close to the series average since the data started in 1997. In services, the score of 1.2 in May was within a tenth of the long-term average and fell fractionally — to 1.1 — in June.

But intelligence gathered since the vote suggests that a third of the BoE’s contacts expect Brexit to have a negative impact on their investment plans over the next 12 months, even if not immediately.

● Signal for growth

● Reason to be cautious
Although these scores were a very good leading indicator of the 2008 recession, they were not so good at picking up the 2013 recovery.

Job ads

Online advertising can give an early indication of companies’ willingness to hire. Immediately after the referendum, openings were down sharply but there are signs normality is returning.

Job openings jumped up by more than 500,000 in the week beginning July 5 as employers reposted jobs they had previously withdrawn and advertised new roles, according to data from according to data from CEB, an information services company. This leaves the number of job openings 7 per cent down compared with the same week in 2015 — a far stronger picture than in the first week post-Brexit, when they were down almost 50 per cent.

Reed, the recruitment agency, reports that in the three weeks since the vote, the number of new jobs on its site was up 8 per cent on the same period last year.

● Signal for growth

● Reason to be cautious
This is a crude and volatile snapshot of the market. Much will depend on whether firms reassess longer-term plans.

Business confidence

How businesses feel about the outlook is a crucial indicator about how likely they are to hire and invest. The signs from the manufacturing sector and large companies are not good. Deloitte reports confidence has tumbled since the Brexit vote, with most finance chiefs surveyed expecting to reduce hiring and investment over the next 12 months.

EEF, the manufacturers’ organisation, reports similar pessimism among manufacturers — but most are not reporting any immediate decrease in volumes, and instead are expecting the impact to be felt over the next six months. EEF now forecasts the sector will remain in recession at least until the end of 2017.

● Signal for growth

● Reason to be cautious
Reviewing plans is not the same as cancelling them and both surveys were conducted before the new government was formed, when uncertainty was greatest. Much of the economic impact will depend on the decisions companies make.

Consumer confidence

Consumer confidence is usually correlated with the ups and downs of the UK economy.

Ipsos MORI, the pollster, reports that economic optimism has fallen to its lowest since January 2012, with 57 per cent thinking the UK’s economic condition will worsen over the next 12 months. This is up from 29 per cent last month.

Many of the groups seeing the biggest increases in pessimism were also those more likely to have voted Remain: young people; mortgage holders and private renters (compared with those who own outright and social renters); social grades AB (compared with C2DE); and those in London and Scotland.

● Signal for growth

● Reason to be cautious
So far this just reflects expectations. The economic impact will depend on how people respond to their gloomier outlook.

John Lewis sales

A bellwether of middle England, John Lewis is the only retailer to publish its sales figures weekly. These indicate that the pace of sales growth has improved after a Brexit lull and is within a whisker of the rate seen in the six months before the referendum.

Sales in the week ending July 16 across John Lewis and Waitrose stores were up 3.2 per cent on a year ago compared with a 3.4 per cent growth rate for 2016 as a whole. This was a normal week, although it was boosted by strong clothes sales in anticipation of the hot weather.

● Signal for growth

● Reason to be cautious
John Lewis data are not always reflective of the wider retail market.


How many shoppers are visiting stores, even in these internet days, provides an early indicator of consumers’ desire to spend.

Data from retail information company Springboard show that footfall — the number of visits to high streets and shopping centres — has recovered partly from the sharp drop straight after the vote. However, compared with the equivalent weeks last year, footfall has been down every week since the vote.

● Signal for growth

● Reason to be cautious
The number of people visiting shops does not translate directly into the amount of money spent.

This article has been amended to change the signal for growth on Job ads to Neutral/positive

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