Omicron halts growth of haulage sector as firms issue price hike warning

UK haulage experienced its first loss in momentum for four months in December, as the Omicron variant stalled economic growthLloyds Bank’s recovery tracker showed 10 of 14 sectors monitored saw an expansion in output, but the overall pace of the UK recovery slowed towards the end of 2021.

Transportation, which includes airlines and rail operators as well as hauliers, recorded its weakest output growth since August last year.

In contrast, several manufacturing sectors monitored by the tracker registered strong month-on-month performance, supported by strong demand and easing supply chain pressures.

The tracker also found that the number of businesses reporting an inability to meet demand due to staff or material shortages eased from its peak in September 2021.

However, the level remained high relative to the long-term average.

Lloyds said the number of firms reporting rising backlogs due to staff or material shortages was around five times the long-term average, compared with September when it was six times higher.

All of the UK sectors monitored reported rising input costs, with wages being a key driver, particularly in the service sector businesses.

Jeavon Lolay, Lloyds Bank head of economics and market insight, said its data showed supply chains were slowly recovering and staff numbers were rising in most sectors: “However, the cost backdrop remained acute as higher energy prices and wage bills pushed up firms’ expenses,” he added.

“It’s no surprise that an increasing number of firms plan to raise their prices in the year ahead, indicating rising and potentially sustained domestic inflationary pressure.”