Tourism and transport ‘among top UK growth sectors’

Tourism and recreation was the fastest growing UK sector in October for the second month in a row, according to the latest Lloyds Bank UK Recovery Tracker.

Lloyds said the sector was “boosted” by the relaxation in international travel rules and more tourists visiting the UK, with a tracker reading of 70. A reading above 50 reportedly signals output is rising, while a reading below 50 indicates contraction.

The sectors that faced high levels of input cost inflation and comparatively lower levels of output price inflation were technology equipment manufacturing, healthcare and tourism and recreation.

Meanwhile, the transport sector (56.4) benefited from an increase in domestic and international travel.

The number of UK sectors reporting output growth hit a three-month high in October, as businesses experienced intense pressure to raise prices, the study revealed.

Tourism and recreation, which includes pubs, hotels, restaurants and leisure facilities was the fastest growing UK sector monitored by the Tracker for the second month in succession.

Lloyds Bank Commercial Banking head of economics and market insight, Jeavon Lolay, said: “After a brief summer slowdown, the UK recovery regained some momentum at the start of the fourth quarter.

“However, while encouraging, the headwinds from supply chain disruption and brisk input price inflation are proving both more persistent and stronger. Many firms are currently preoccupied managing continuing pressures on their capacity and bottom lines.

“It suggests that inflationary pressures are likely to continue to intensify in the coming months.

“This could further dent consumer confidence and restrain household spending, the mainstay of the recovery so far.”

Scott Barton, managing director, corporate and institutional coverage, added: “October’s data reveal an improved economic picture for the UK, but the supply chain disruption and raw materials shortages that have dogged businesses for months are holding firm.

“They are now being compounded by rising energy prices and rising salary expectations.

“Many business leaders will be frustrated that they cannot take full advantage of recovering demand and will be concerned that fully passing on higher input prices could make their products and services less competitive.

“While the situation is currently very challenging, the broad expectation remains that this global cost shock will prove transitory and that supply chains will recover next year.”