Business insights and impact on the UK economy: 26 January 2023

• In December 2022, almost a third (30%) of trading businesses reported turnover was lower compared with November 2022, while 13% reported their turnover was higher; the wholesale and retail trade industry reported the largest percentage of businesses whose turnover was lower, at 46%.

• Around one in six (17%) trading businesses reported that they expect their turnover to decrease in February 2023, while 14% expect their turnover to increase.

• Of trading businesses, 41% reported an increase in the prices of goods or services bought in December 2022 compared with November 2022, down from 42% reported between October and November 2022.

• Energy prices remain the top reason businesses are considering raising their prices in February 2023 with 35% of trading businesses reporting this; the accommodation and food service activities industry reported the largest proportion, at 78%.

• Almost a quarter (23%) of businesses reported their overall performance such as pricing, trading and workforce had decreased in December 2022 compared with December 2021.

• In mid-January 2023, a quarter (25%) of businesses reported an increase in their staffing costs over the last three months, with the accommodation and food service activities industry reporting the largest proportion of businesses whose staffing costs had increased, at 44%.

The data presented in this bulletin are the results from Wave 74 of the Business Insights and Conditions Survey (BICS), which was live from 9 to 22 January 2023.

Businesses were asked to exclude seasonal changes when answering questions contained within BICS. As the survey reference period for BICS covered 1 to 31 December 2022, estimates may be beyond usual seasonal variation.

The data reported within BICS bulletins and datasets are estimates that are subject to uncertainty, for example, sampling variability and non-sampling error. Further information on quality is available in our Business insights and conditions Quality and Methodology Information (QMI) and we regularly update confidence intervals associated with the survey questions.

Experimental single-site weighted regional estimates up to Wave 60 (27 June to 10 July 2022) are available in our Business insights and impact on the UK subnational single-site economy: July 2022 article.

Figure 1: Headline figures from the Business Insights and Conditions Survey

Notes:

1. For presentational purposes, response options have been combined and/or excluded.
2. Prices: for presentational purposes, the data show an increase to prices bought and sold compared with the previous calendar month.
3. Data are plotted in the middle of the period of each wave.

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In mid-January 2023, the percentage of businesses that reported they were trading was 95%, with 85% fully trading and 9% partially trading (for example, trading with reduced hours or staff numbers). Meanwhile, 4% of businesses reported “temporarily paused trading” and 2% “permanently ceased trading” as their business’s trading status.

Turnover

Trading businesses were asked how their turnover in December 2022 compared with November 2022.

In December 2022, almost a third (30%) of trading businesses reported their turnover was lower compared with November 2022, while 13% reported their turnover was higher, a net decrease of 17%. The largest movement for the proportion of businesses that reported a decrease in turnover came in the accommodation and food service activities industry, down 13 percentage points to 35% in December 2022 compared with the previous calendar month.

The accommodation and food service activities industry reported a 17 percentage-point increase in the proportion of businesses whose turnover had increased over the same period, with the figure now reported at 22%. Much of this came from the beverage serving activities sub-industries. Over the same period, the accommodation and food service activities industry also saw an increase of 17 percentage points in the proportion of businesses reporting an increase in domestic demand for goods and services (22%), which may in part be because of seasonal fluctuations.

Of trading businesses, 32% reported that economic uncertainty is currently having an impact on their turnover. Although this was still the most reported challenge currently affecting turnover, the largest movement in having an impact was for weather conditions, up 6 percentage points to 8%.

Turnover expectations

Trading businesses were asked about their turnover expectations for February 2023, excluding any seasonality trading.

In mid-January 2023, the proportion of businesses that reported they expect turnover to decrease in February 2023 was down 12 percentage points to 17% compared with business expectations in the previous month for January 2023. This was the smallest proportion that expected a decrease in turnover since September 2022.

Trading businesses within the accommodation and food service activities industry reported the largest proportion (40%) of businesses expecting a decrease in turnover in February 2023, however, this is down 26 percentage points from expectations for January 2023 (66%). Businesses in the same industry reported they expect turnover to stay the same (39%) or to increase (10%), up 13 percentage points and 8 percentage points respectively.

Prices bought and sold

Businesses were asked how the price of goods or services bought and/or sold by their business in December 2022 compared with the previous calendar month. The data suggest that some businesses continue to experience a continued increase in prices bought and/or sold month on month.

In mid-January 2023, 41% of trading businesses reported the prices of goods or services bought had increased in December 2022 compared with the previous calendar month, broadly stable with November 2022 (when compared with October 2022). For prices sold, this percentage was 17% across the same period.

Price expectations

Businesses not permanently stopped trading were asked what their expectations for the prices of goods or services sold are for February 2023.

The accommodation and food service activities industry reported the largest proportion of trading businesses expecting the prices of goods or services sold in February 2023 to increase, at 39%, a decrease of 7 percentage points compared with expectations for January 2023.

These businesses were asked what, if anything, was causing them to consider raising their prices. Approximately two-thirds (55%) of businesses reported one or more reasons why they would be considering raising their prices. Energy prices continued to be reported as the top reason businesses are considering raising their prices in February 2023 with 35% of businesses reporting this, while 34% reported they are not considering raising prices.

Further details on price expectation broken down by trading status, industry and size band are available in our accompanying dataset.

Energy prices

In mid-January 2023, 35% of businesses not permanently stopped trading reported their production and/or suppliers had been affected by the recent increase in energy prices, broadly stable with early December 2022.

The accommodation and food service activities industry continues to report the highest proportion of businesses affected by recent increases in energy prices, at 71%. However, the greatest increase in the proportion of businesses that have been affected was for the manufacturing industry, up 13 percentage points to 53%. This was notably among businesses in the manufacture of fabricated metal products, except machinery and equipment sub-industries.

Further details on the effects of energy price rises broken down by trading status, industry and size band are available in our accompanying dataset.

Staffing costs

Businesses not permanently stopped trading (the Business Insights and Conditions Survey does not cover all sectors of the economy and only includes private businesses) were asked how their business’s staffing costs have changed over the last three months and how they expect them to change over the next three months.

In mid-January 2023, a quarter (25%) of businesses reported an increase in staffing costs with this increasing to 50% for businesses with 10 or more employees.

The accommodation and food service activities industry reported the largest proportion of businesses reporting an expected increase in their staffing costs over the next three months, at 44%. This is an increase of 21 percentage points since early October 2021 and the largest movement reported by any industry.

Further details including all response options broken down by trading status, industry and size band are available in our accompanying dataset.

Performance

Businesses not permanently stopped trading were asked how they would describe their business’s overall performance such as pricing, trading and workforce in December 2022, compared with December 2021.

Of trading businesses, 22% reported their overall performance, which includes pricing, trading and workforce, had decreased in December 2022 compared with December 2021.

Businesses were also asked how they thought their business would perform in the next 12 months.

The proportion of trading businesses expecting their performance to increase over the next 12 months was 22%, while 11% expect their performance to decrease. The industries with the highest percentage of businesses expecting a reduction in performance were:

• the accommodation and food service activities industry (22%)
• the other service activities industry (22%)
• the real estate industry (21%)

Reporting unit

The business unit to which questionnaires are sent is called the reporting unit. The response from the reporting unit can cover the enterprise as a whole or parts of the enterprise identified by lists of local units.

Net balance

Net balance is the difference between the percentage of businesses that reported a decrease, and the percentage of businesses that reported an increase.

More quality and methodology information (QMI) on strengths, limitations, appropriate uses, and how the data were created is available in our Business Insights and Conditions Survey (BICS) QMI, updated on 24 January 2022. 

The BICS is voluntary, and the results are experimental. More information is available in our Guide to experimental statistics.

The results are based on responses from the voluntary fortnightly BICS, which captures businesses' views on financial performance, workforce, prices, trade and business resilience. The Wave 74 survey was live for the period 9 to 22 January 2023. The BICS survey questions are available.

Coverage

The Monthly Business Survey (MBS) covers the UK for production and Great Britain (GB) only for services. The Retail Sales Index (RSI) and construction are GB-focused. Therefore, the BICS will be UK-focused for production-based industries but GB-focused for the other elements of the economy covered. The sectors covered are:

• non-financial services (includes professional, scientific, communication, administrative, transport, accommodation and food, private health and education, and entertainment services)
• distribution (includes retail, wholesale, and motor trades)
• production (includes manufacturing, oil and gas extraction, energy generation and supply, and water and waste management)
• construction (includes civil engineering, housebuilding, property development and specialised construction trades such as plumbers, electricians, and plasterers)

The following industries are excluded from the survey:

• agriculture
• oil and gas extraction
• energy generation and supply
• public administration and defence
• public provision of education and health
• finance and insurance

For more information on the methodology of producing the BICS, such as weighting, please see our BICS quality and methodology information.

More quality and methodology information (QMI) on strengths, limitations, appropriate uses, and how the data were created is available in our Business Insights and Conditions Survey (BICS) QMI.