British business hopes plunge
An index of British companies’ optimism about the economy compared with three months earlier dropped by 3 points from November to minus 23, the unit of Lloyds said in an e-mailed report released in London. December’s reading was the lowest since January 2009.
“The results indicate that the economy will almost certainly begin the new year with a contraction,” Lloyds economists Hann-Ju Ho and Jonathan Thomas wrote in the report. “As this indicator leads quarterly gross domestic product growth by three to four months, it suggests that economic activity will progressively weaken during the first quarter and the start of the second quarter of 2012.”
While GDP expanded 0.6% in the third quarter, British services output fell the most in six months in October, indicating the economic rebound lost momentum at the start of the fourth quarter.
The Bank of England, which restarted bond purchases on October 6to support the recovery, forecast stagnation in the last three months of 2011 as Europe’s debt crisis dented confidence and curbed demand.
A measure of perceptions among companies about their trading prospects over the next 12 months plunged 14 points to 17 in December, the Lloyds unit said.
The declines in the two gauges suggest British GDP shrank 0.1% in the fourth quarter of 2011, with the contraction accelerating to 0.4% in the first three months of 2012, Ho and Thomas said.
The probability of recession rose to 74% last month, compared with 44% in November and 25% the previous month, the economists said.
The Lloyds unit questioned 304 companies, all with sales of more than £1 million (€1.2m) between November 28 and December 15 for the report.
A separate index of new jobs published by Reed.co.uk, Britain’s largest recruitment website, fell to 121 in December from 133 the previous month. Reed’s gauge of salaries gained 1 point to 99.
