LONDON (MNI) – The UK’s service sector, which dominates the
economy, still has “significant spare capacity”, according to the latest
Bank of England Agents’ report.
The question of how much spare capacity there is in the UK economy,
in the wake of the credit crunch, is a key one for the Bank of England’s
Monetary Policy Committee, and the agents report supports the view it is
still substantial.
The agents report said “capacity utilisation was reported to be
around normal in manufacturing, but there was significant spare capacity
in the service sector.”
Manufacturing growth has outstripped that in services and the
report found “employment intentions in the manufacturing sector had
picked up … but had remained broadly flat in services.”
The report said employment in the private sector was expected “to
grow at a modest pace over the next six months.”
Firms, however, continued to make use of temporary contracts
reflecting the uncertainty of the demand outlook.
The picture was patchy, with export focussed firms increasing
hiring but “employment intentions among consumer-facing firms were
weakening.”
–London newsroom: 4420 7862 7491 e-mail: drobinson@marketnews.com
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