Business News Round Up (20/01/2023)
Rising number of sectors report output growth in December
The number of UK sectors reporting output growth more than doubled in December, according to the Bank of Scotland UK Sector Tracker. Seven of the 14 sectors monitored reported output growth (versus three in November) – the highest number since June 2022. However, overall, UK economic activity saw a slight decline (49 vs. 48.2 in November). A reading above 50 on the tracker indicates expansion, while a reading below that indicates contraction. Software services firms (56.8 vs. 47.5 in November) and automotive manufacturers (53.1 vs. 38.0 in November) posted the fastest rises in activity. The tourism and recreation sector (50.2 against 44.6 in the previous month) – which includes pubs, hotels, and restaurants – also saw output grow, supported by the World Cup. December’s data presented positive signs of business’ inflationary pressures easing, which in turn could feed through to a slowdown in the increase in prices charged to consumers, according to Bank of Scotland. The report found that 11 of 14 sectors in December reported slower input cost inflation month-on-month – the highest number since July 2022. The chemicals sector posted the largest reduction in cost inflation (down 9.6 points month on month), while there were also significant declines for automobiles and auto parts manufacturing (-6.9), and food and drink manufacturing (-6.8).
https://www.insider.co.uk/news/rising-number-sectors-report-output-29004014
North West corporate insolvencies ‘on the rise’
The number of companies filing for administration across the North West jumped by two thirds in 2022. Analysis of notices in The Gazette by Interpath Advisory reveals that a total of 212 companies based in the region fell into administration in 2022, up from 126 firms in 2021. This represents a 68 per cent increase on last year. It mirrors the UK picture, which saw a total of 1,039 businesses fall into administration in 2022, a rise from 710 in 2021. However, numbers are still well below pre-pandemic levels of 1,422 in 2019 and 1,337 in 2018. Rick Harrison, managing director and head of Interpath’s team in the North West, said: “2022 came as a body blow for many businesses who had been hoping for a year of respite following two years’ of disruption caused by the pandemic. Instead, spiralling inflation, rising interest rates, faltering consumer confidence, political turbulence and weaker cross-border trade served to pile on even more pressure. And despite new figures released by the Office for National Statistics confirming that the UK economy grew by 0.1 per cent in November, the longer-term outlook remains highly uncertain.”
https://www.insidermedia.com/news/north-west/corporate-insolvencies-across-north-west-rise
Rising costs cause more hospitality closures than Covid
More hospitality businesses closed last year than in 2021 as soaring costs proved to have a bigger affect than the Covid pandemic. There are now 13,037 fewer outlets across the UK than at the start of the pandemic in March 2020 – a contraction of more than 10% in under three years. Higher energy bills and other costs led to a net decline of 1,611 licensed premises in the fourth quarter alone, according to the latest Hospitality Market Monitor from AlixPartners and CGA by Nielsen IQ. It represents a 1.6% contraction of the market in just three months – equivalent to nearly 18 net closures every day. Across the whole of 2022, hospitality recorded a drop of 4,809 premises, or 4.5% of the total at the end of 2021, with more than three quarters of the closures occurring in the second half of the year. Many of 2022’s closures were the result of spiralling costs in energy, food and other key areas, which have hit profit margins and made real-terms growth difficult. Fragile consumer confidence, rail strikes, and labour shortages are all adding to the headwinds facing hospitality operators in 2023.
Investors BGF reports standout year for exits in the North West
BGF, one of the largest and most experienced growth capital investors in the UK and Ireland, has achieved a record year for realisations in the North West, having completed three highly successful exits, with an enterprise worth of £400 million and a combined money multiple of more than 3.7x. In 2022, BGF exited St Pierre Groupe, an international market leader in the bakery sector headquartered in Didsbury, Manchester, following its acquisition by Grupo Bimbo, one of the world’s largest baked goods and snacking companies. BGF originally backed St Pierre Groupe with an £8 million investment in November 2018. The exit generated a money multiple of 9.6x and an IRR of 85% for BGF. In addition, BGF exited both Liverpool’s Sentric Music, which was acquired by Swiss fintech company, Utopia Music, and Manchester-headquartered NSS, which was acquired by Premier Technical Services Group Ltd (PTSG). In the North West, £53 million was invested into the local growth economy, with BGF completing seven new deals in 2022, including Heywood-based logistics and courier specialist, ITD Global and Wigan-based Evolution Aqua – a designer, manufacturer and supplier of aquatics and water filtration products. Other deals in 2022, include social media business KOMI Group, R&D tax relief specialists RDS and apprenticeship training provider Apprentify.