Export growth offsets consumer concerns

robust demand from emerging markets and developed economies fuelled continued growth in the export sector, according to the latest Bank of England summary of business conditions.

But the monthly report, compiled by the bank’s network of regional agents, revealed a different picture for the domestic market.

Consumer demand continued to weaken, with shoppers focused on value for money, which has forced retailers to rely on promotions to induce them to spend.

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In the housing market, demand weakened further amid concerns that house prices might begin to fall more quickly and households’ uncertainty about earnings.

On the business side, investment intentions pointed to a moderate pace of growth in capital spending over the next year, with some exporters investing in extra capacity.

Firms were also investing in new products to try to exploit growth markets at home and abroad.

Turnover in professional and financial services continued to grow at a modest pace, as accountants and lawyers reported small improvement in activity.

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In construction, activity over the last three months was broadly in line with the same period last year, supported by spending on infrastructure and energy projects and office building in London.

Most SMEs complained that credit conditions had not improved, calling into question growth plans and raising concern over the availability of working capital.