Slowdown in growth confounds expectations
Momentum in UK private sector growth slowed in the three months to November, according to the latest CBI Growth Indicator
The composite measure based on 676 respondents across the distribution, manufacturing and service sectors showed the balance of firms reporting a rise in output at +6%, compared with +11% in the three months to October 2017.
Growth was mixed across sectors. Manufacturing output growth accelerated in the three months to November, while the pace of growth eased in the distribution sector. Meanwhile, volumes in business and professional services remained flat for the third month running, whereas volumes in consumer services fell at the fastest pace since April 2013.
Looking ahead, the private sector is set to grow at a similar pace (+6%) over the next three months, with growth across sectors set to be mixed once again. Growth in distribution volumes is expected to remain brisk, while manufacturing growth is set to slow. Consumer services volumes are expected to stabilise, while volumes in business and professional services are anticipated to decline marginally for the first time in a year.
Rain Newton-Smith, CBI Chief Economist, said:
“While firms had anticipated that the three months to November would show steady growth in the private sector, growth has actually slipped.
“Once again, consumer facing businesses are feeling the pinch as inflationary pressures constrain incomes, with consumer services volumes falling at their fastest pace in more than three years. Meanwhile, business and professional services have seen barely any growth during 2017, and this pattern has continued in November.
“Productivity enhancing measures remain the priority and the launch last month of the Government’s Industrial Strategy is a real step in the right direction. But we need the Brexit negotiations and the industrial strategy to progress together to really deliver the environment that firms need to drive growth and prosperity.”