Business News Round Up (13/02/2023)
UK firms cut back on hiring as rising costs hit business optimism
British firms have begun cutting back on hiring as services businesses suffered a hit from the UK’s cost-of-living crisis, new research from BDO shows. Hiring has fallen to its lowest levels since December 2021, following a sharp drop in business output over the previous year, data from BDO’s business trends report shows. UK business output fell for the fourth month in a row to its lowest levels since March 2021 after the British economy first reopened following the third national lockdown. The drop in output, from an index rate of 122.09 in January 2022 to 89.15 in January 2023, came as weakened consumer spending took a severe hit on the UK’s services sector. Falling productivity in turn saw business optimism flatline, as the service sector’s decline offset increased confidence in Britain’s manufacturing industry. Concerns about soaring inflation saw the service sector’s confidence continue to fall, as a slowing rate of inflation in manufacturing inputs caused an uptick in the industry’s optimism. Inflation, however, eased from its peak to its lowest levels since March 2022, as falling wholesale energy prices seeped into the wider economy.
Slump in Scottish business activity accelerates
A decline in Scottish business activity has accelerated with few signs of a bounce back and expectations that firms will trim their payrolls, according to new data. Figures for January from Royal Bank of Scotland showed output from the manufacturing and services sectors fell from December’s five-month high, signalling a quickened contraction in private sector activity. The rising cost of living, supply chain disruptions and a slowdown in the housing market all contributed towards the latest downturn. Service firms led the decline, registering faster rates of reduction in both business activity and new orders compared to their manufacturing counterparts. Of the 12 UK regions monitored by the Royal Bank of Scotland Business Activity Index Scotland registered the sharpest pace of contraction in incoming new business. Despite the difficult start to the year and the prospect of recession for much of this year, businesses were more optimistic for the longer term. The future activity category, which asks businesses to rate their prospects for growth over the next 12 months, reached its highest level in six months. This was driven by the possibility of new projects and increasing activity.
https://dailybusinessgroup.co.uk/2023/02/slump-in-scottish-business-activity-accelerates/
Falling business activity signals a challenging start to the year
A renewed decline in business activity in January signalled a difficult start to the new year for firms across the North West, the latest Regional PMI data from NatWest showed. However, amid further signs that cost pressures had passed their peak, local businesses reported increased optimism towards the year-ahead outlook and continued to take on additional staff. The headline North West PMI Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – slipped back into sub-50 contraction territory in January, dropping from 50.0 in December to 47.2. The latest reading marked the fourth decrease in business activity in the past five months, and a rate of decline that was the quickest for two years. The downturn was led by weakness in manufacturing output, underlying data showed. January data indicated that demand for goods and services across the North West remained under pressure from soaring prices, tightening financial conditions and market uncertainty. Inflows of new business fell for the seventh month in a row, and at a quicker rate than in December. Underlying data showed decreases in new orders across both manufacturing and services, with the former recording the sharper rate of decline by far.
Scotch whisky exports more than £6 billion for the first time – despite domestic headwinds
Global exports of Scotch whisky grew to more than £6bn for the first time in 2022, according to figures from the Scotch Whisky Association (SWA). In 2022, the value of Scotch whisky exports was up 37% by value, to £6.2bn. The number of 70cl bottles exported also grew by 21% to the equivalent of 1.67bn. The Asia Pacific region overtook the European Union as the industry’s largest regional market, with double-digit growth in Taiwan, Singapore, India and China as the post-Covid recovery continued. While established EU markets such as France, Germany and Spain continued their post-pandemic bounce-back with strong growth in 2022, India replaced France as the largest Scotch whisky market by volume. Despite double digit growth, Scotch whisky still only comprises 2% of the Indian whisky market. SWA analysis shows that a UK-India free-trade agreement deal which eases the 150% tariff burden on Scotch Whisky in India could boost market access for Scotland’s whisky companies, allowing for an additional £1bn of growth over the next five years. In North America, the United States continued its recovery following the impacts of tariffs on single malt to again be the industry’s only market, with exports valued at more than £1bn. Both Mexico and Canada also saw growth, underlining the importance of securing further market access wins through the renegotiation of the UK’s trade agreements with both countries.
https://www.insider.co.uk/news/scotch-whisky-exports-more-6-29183181