The number of UK business sectors reporting output growth rose last month as supply conditions improved, according to a new report.
However, firms continued to face “significant” cost inflation, which translated into a record uptick in selling prices among service sector businesses, the latest Bank of Scotland (BoS) UK Recovery Tracker reveals.
The number of UK sectors reporting output growth increased in January to 11 out of 14 – up from ten in December, and the highest number since last October.
UK chemicals manufacturers registered the fastest output growth of any sector monitored, due to a solid increase in new orders, after contracting in December. Fewer supplier delays helped automotive manufacturers’ output increase at the fastest rate in seven months.
But concern over the Omicron variant and Plan B restrictions, which remained in place for the majority of January in England, hampered activity for consumer-facing businesses.
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Jeavon Lolay, head of economics and market insight at BoS parent Lloyds’ commercial banking division, said: “An increase in the number of sectors reporting output growth in January is good news to start the year.
“While consumer-facing service businesses have borne the brunt of Covid-19, high-frequency data show activity here also rebounding after restrictions were eased last month.
“If it goes ahead, the announcement that all Covid regulations could be abolished earlier than planned in England in the coming weeks should also translate into stronger consumer demand as the post-pandemic recovery further normalises.
“Sharp focus will also be on how the divergent inflationary trends revealed in our report unfold in the months ahead.”
By Scott Reid
Source: The Scotsman