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Highlights
- Growth of UK companies has plunged from 23% to 5% in the three months to June 2022, as per CBI.
- Higher inflation has turn led to slower business activity owing to weak consumer demand.
- Manufacturing was the only sector to witness output growth as per the latest Growth Indicator.
The growing cost-of-living crisis in the UK has hit the growth of the country’s private sector. According to a study by the Confederation of British Industry (CBI), the growth of UK companies has severely dropped from 23% to 5% in the three months to June 2022. Since April last year, this has been the most sluggish pace of growth in activity.
The UK inflation levels have recently hit a new 40-year-high level of 9.1% in May. The major contributors to this spiralling inflation include the rise in food and fuel prices along with the energy price cap hike. Higher prices have led to a significant squeeze in the households’ budgets and have reduced their overall purchasing power, which has, in turn, led to slower business activity owing to weak demand.
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While business activity is slowing, consumer confidence has been going down and has recently hit its almost 50-year low level. Activity slowed down across sectors, but the biggest hit was taken by consumer services, which declined by over 40%. The sector hasn’t witnessed such a significant fall since February last year. Business & professional services and distribution also witnessed a decline in growth.
Even though the growth in the manufacturing sector fell from the 10-month high of 30% in May to 25%, it was the only sector to witness output growth as per the latest Growth Indicator. Analysts predict that manufacturing growth is expected to rise in the future too, although at a slower pace.
Keeping the prospects of the manufacturing sector in mind, let’s look at stocks that investors can keep an eye on.
AstraZeneca plc (LON: AZN)
The shares of the top producer of pharmaceutical products, AstraZeneca plc, were down by 0.35% at 8:27 AM (GMT+1) on 27 June 2022, at GBX 10,738.00. The FTSE 100 company has given its shareholders a return of 26.49% over the past year as of 27 June 2022, while its YTD return stands at 23.88%. AstraZeneca currently holds a market cap of £166,970.95 million.
Anglo American plc (LON: AAL)
The shares of the leading UK-based metal producer, Anglo American plc, were up by 3.15% at 8:30 AM (GMT+1) on 27 June 2022, at GBX 3,162.50. The FTSE 100 company has given its shareholders a return of 7.21% over the past year as of 27 June 2022, while its YTD return stands at 5.45%. AAL currently holds a market cap of £41,010.14 million.
BAE Systems plc (LON: BA.)
The shares of the leading global defence manufacturer, BAE Systems plc, were up by 2.25% at 8:33 AM (GMT+1) on 27 June 2022, at GBX 800.60. The FTSE 100 company has given its shareholders a return of 49.46% over the past year as of 27 June 2022, while its YTD return stands at 45.43%. BAE Systems currently holds a market cap of £24,711.63 million.
