Transport and tourism and leisure recorded the fastest falls in activity of any UK sectors in July, according to the Lloyds Bank UK Sector Tracker.
The monthly Lloyds Bank tracker found nine out of 14 economic sectors reported falling output in the month, the highest number since the Covid-19 winter lockdown of January 2021.
The slowdown in activity across the economy compared with just four sectors contracting in June.
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Transport saw the fastest fall in activity, with airlines suffering disruption due to staff shortages across aviation and the railways hit by national rail strikes.
Tourism and recreation was the second most-impacted sector by what Lloyds described as the “unwinding of post-pandemic pent-up demand and increases in the cost of living” leading consumers to curb discretionary spending.
Ten of the 14 sectors reported falling demand month on month.
The tracker did suggest an easing both of pressures on supply chains and of inflation in input costs, with all but one of the sectors reporting a slower rise in input prices and nine of the 14 reporting a slower rise in prices to customers compared with June.
Jeavon Lolay, head of economics and market insight at Lloyds Bank corporate and institutional banking, said: “Rising inflationary pressures are dampening activity and demand across the economy.
“This includes a consumer-led slowdown reflecting the fall in real incomes.”
Lolay noted: “It was encouraging that 13 of the 14 sectors reported a slower increase in input prices in July. This suggests some of the underlying drivers of economy-wide inflation are subsiding.
“But for now, many firms have little choice but to increase prices to help protect margins.”
Scott Barton, managing director of Lloyds Bank corporate and institutional banking, said: “Operating conditions remain challenging, particularly when it comes to demand.”
He warned: “Without adequate liquidity, businesses will find it difficult to weather further downturns in trading conditions.”
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