The Bank’s Summary of Business Conditions, based on intelligence gathered from contacts around the United Kingdom over the last quarter, showed that there had been a modest pick-up in retail sales growth over the past month, boosted by stronger sales of seasonal clothing and footwear.
Poor weather saw sales drop by 1.5 per cent in the first three months of the year with just a third of those contacted by the Bank of England saying they expected to recoup the loss.
Increased demand from the World Cup was expected to give a positive boost to electrical items and alcoholic drinks.
Employment intentions remains an area for concern among the report’s contributors, with planned productivity improvements from the use of automation expected to constrain any growth in hiring in certain sectors.
The difficulty in recruiting the right personnel remains “widespread across sectors and job roles”, the study said.
Growth in export output remains robust, despite easing slightly, with many manufacturers saying they were benefiting from suppliers looking to source greater levels of UK goods.
Brexit is causing exporters to examine supply chains and there is increased concern levels over trade protectionism.
However most exporters said there was continued strong volume growth to both the EU and the USA, particularly in textiles and pharmaceuticals.
Those involved in export supply chains enjoyed stronger growth levels while the makers of big ticket items reported worsening performance owing to weakening consumer confidence. In business services, turnover grew solidly and at a higher rate than most sectors.
Professional firms said that mergers and acquisitions from overseas firms, along with Brexit preparations, insolvency and restructuring activity helped to drive fee growth.
Regulatory changes such as the introduction of GDPR also supported activity.
Pressure to improve shareholder returns continued to impact on financial services while technological; developments had enabled increased competition in certain sectors.
Pay settlements were slightly higher averaging between 2.5 per cent and 3.5 per cent and material cost inflation remained steady with the pass-through of the depreciation of the value of sterling and cost of importing goods having abated.
Elsewhere, the demand for corporate credit remained subdued with firms involved in construction and development seeing the availability of credit tighten- ing.
Bank of England Agent for the Yorkshire & Humber, Juliette Healey, said: “The Bank’s policy makers have been very keen to hear what businesses across the country have been telling our agents over the past few months.
“Growth in the economy slowed markedly in the first quarter of the year and our contacts here in Yorkshire have been helping us to understand the causes of this, in particular the role played by the bad weather in March and April.
“Since then our contacts have seen a modest pick-up in retail sales growth, helped by stronger sales of seasonal clothing and footwear.
“But we are seeing ongoing weaker demand for big-ticket items, including new cars.
“Growth in consumer services has also slowed somewhat, particularly in travel and tourism.
“Contacts have told us that this might be due to the squeeze on people’s spending power because until recently inflation has been outstripping wage growth, as well as political uncertainty.
“Even so, many of our contacts are relatively optimistic about the outlook.
“Our evidence suggests that pay awards are generally a little higher than a year ago and inflation is falling back towards the Bank of England’s two per cent target.
“This should boost real incomes and, in turn, spending on goods and services.”