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The
BoE released some of the findings of its August regional agents'
survey in last week's quarterly Inflation Report, which showed
companies expected the referendum would hurt capital spending,
hiring and turnover over the coming year.
Although Wednesday's report suggested the economy is likely to
slow, the monthly survey of around 700 companies was not as
starkly downbeat as the larger purchasing managers' indexes (PMIs).
"This survey therefore adds some weight to the view that the
immediate sharp drop in the (PMI) indices may have been a slight
over-reaction," said James Knightley, senior economist at ING.
Last week's Markit/CIPS PMIs suggested the economy is now
contracting at the fastest rate since the 2008-09 financial
crisis. [GB/PMIS]
Deputy Governor Ben Broadbent cited this in a Reuters interview
last week as one reason why the BoE cut interest rates to a new
record low and launched stimulus measures that could add up to
170 billion pounds ($222 billion) to the financial system.
Revenue growth in business services firms eased to a three-year
low, according to the BoE survey. But for consumer services
companies the slowdown was much smaller.
The BoE's gauge of retail sales values fell to its lowest level
since August 2012, but the central bank linked some of this to
unusually wet weather.
On Wednesday, major retailers including supermarket Tesco and
department store and food retailer John Lewis said they had not
yet been affected by the referendum result, and the British
Retail Consortium reported strong spending growth.
In common with other business surveys, however, the BoE said
investment and employment intentions wilted last month.
"With British businesses suggesting that they are pulling back
on expansion plans the survey is consistent with the general
consensus expectation amongst economists that the UK will
experience a mild recession over the next 6-12 months," ING's
Knightley concluded.
Last week the BoE forecast that growth rates would slow to just
above zero for the rest of the year but - partly reflecting the
expected effect of its own stimulus measures - stopped short of
predicting recession.
($1 = 0.7658 pounds)
(Reporting by Andy Bruce, editing by David Milliken and Hugh
Lawson)
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