Monthly Decision Maker Panel Data – April 2024
The latest data from the Decision Maker Panel (DMP) survey, which compiles insights from Chief Financial Officers (CFOs) of UK businesses of all sizes, has been released, offering a snapshot of the economic landscape and business sentiment for April 2024.
The survey, carried out between April 5th and 19th, garnered 2,379 responses, painting a detailed picture of current economic trends and future expectations within the UK business sector.
Output Prices Show a Slight Decrease
The survey’s findings indicate that the average annual rate at which firms’ output prices rose has slightly decreased. In the three months leading up to April, output prices increased by an average of 5.2%, a small dip from the 5.4% rise observed in the previous three-month period. This decline reflects a broader trend across the entire economy, affecting not only consumer-facing firms but businesses in general.
Future Inflation Expectations
Looking ahead, businesses anticipate a decrease in output price inflation over the next year. The expectation for year-ahead own-price inflation has dropped to 4.0% for the three months to April, down from 4.1% in the three months to March. Accordingly, output price inflation is expected to fall by 1.2 percentage points over the next 12 months, based on three-month averages.
Further breaking down inflation expectations, the one-year ahead Consumer Price Index (CPI) inflation expectation declined to 2.9% in April, down from 3.2% in March, with the three-month average slipping by 0.2 percentage points to 3.1%. Three-year ahead CPI inflation expectations, however, remained steady at 2.7% for the three months to April, despite the monthly data showing a slight decrease to 2.6%.
Employment and Wage Growth Trends
Regarding employment, firms reported a 1.7% growth in annual employment for the three months to April, a decrease from the 2.0% growth reported in the prior quarter. The expected year-ahead employment growth also saw a minor reduction, setting at 1.3% for the three months to April, down from the previous period.
When it comes to wages, there’s a slight downward adjustment in expectations. The anticipated year-ahead wage growth settled at 4.8%, according to a three-month moving-average basis, which is a slight decline from earlier figures. Moreover, annual wage growth for the period up to April was recorded at 6.2%, marking a decrease from the previous three months. This suggests firms are bracing for a 1.4 percentage point drop in wage growth over the next year, based on three-month averages.
Borrowing Costs
The average interest rate paid by firms on their borrowing, encompassing both bank and market-based sources, was reported at 7.0% in April, a minor drop from 7.1% in March. Looking forward, businesses expect the average interest rate on their borrowing to decrease to 6.0% over the next year. However, this forecasted rate is still significantly higher than the 3.6% end-of-2021 figure, signaling a persistently elevated borrowing cost environment.
The DMP’s most recent findings offer crucial insights into the current economic and business conditions in the UK, highlighting trends in inflation, employment, wage growth, and borrowing costs. As the landscape evolves, these data points serve as a key resource for understanding the challenges and opportunities facing businesses in the coming months.
