Growth picks up in the quarter to May - CBI Growth Indicator

Growth in the UK’s private sector picked up in the three months to May, according to the latest CBI Growth Indicator. 

The composite measure, based on 731 respondents across the distribution, manufacturing and service sectors, showed the balance of firms reporting a rise in output at +10%, up from +3% in the three months to April. 

The increase in growth was driven by stronger activity in business and professional services and distribution. This contrasts with consumer services, where volumes continued to fall, and manufacturing output, which flatlined following a lengthy period of solid growth. 

Looking ahead, private sector growth looks set to strengthen further in the three months to August (+23%), fuelled by steady growth in business and professional services alongside an acceleration in manufacturing, distribution and consumer services growth.

During this year and next, the CBI expects conditions to remain challenging for consumer-facing companies and retailers, as elevated inflation and slow wage growth continue to squeeze household budgets, alongside ongoing cost pressures. Meanwhile, manufacturers should continue to benefit from the lower level of sterling and solid global economic growth. Please see the CBI’s December 2017 economic forecast for further details (our next forecast will be published 8^th June).

Anna Leach, CBI Head of Economic Intelligence, said: 

“After a weak Q1 according to official data, the CBI’s growth indicator points to firm private sector growth in the months to May, and growth is tipped to pick up further next quarter.

“While there was positive news for a number of sectors, consumer-facing firms continue to feel the pinch. With inflation coming down and wage growth edging up, the squeeze on household incomes is set to ease in the coming months – but the burden of high street business rates will keep optimism in check.” 

03 June 2018

Notes to Editors:

The CBI Growth Indicator is a composite of data on output, sales and business volumes drawn from three of the CBI’s long-running qualitative UK business surveys: the Industrial Trends Survey (ITS, covering manufacturing); the Distributive Trades Survey (DTS, covering retail, wholesale and motor trades); and the Service Sector Survey (SSS, covering business, professional and consumer services).

The Growth Indicator covers the volume of output for the ITS, volume of sales for the DTS and volume of business for the SSS for the past three months and next three months.

A ‘balance’ is the difference in percentage points between the weighted percentage of firms answering that output is “up” and the percentage answering “down” (for example, if 30% of firms say that output is up, 60% that it is unchanged, and 10% that it is down, the balance statistic is +20%).