Private sector activity stabilises

Private sector activity stabilised in the three months to June, according to the CBI’s latest Growth Indicator (a composite of activity across our business surveys), ending a streak of ten successive rolling quarters in which output had fallen. The ending of the negative growth streak can be attributed to a mild expansion in services volumes, while the pace of decline in both manufacturing output and distribution sales eased.

Activity is expected to pick up slightly over the next three months, according to our forward-looking Growth Indicator measure, with services’ momentum set to build and manufacturers once again anticipating a return to growth in output – it is worth noting that expectations have not been met for the last 6 months. Meanwhile, distribution sales look set to fall again, at an even faster pace, though within that, the pace of decline in retail is relatively modest. Meanwhile, hiring intentions across the private sector remain firm, and expectations for selling price growth in the next three months are at their softest since April 2021.

In June, we recently upgraded our forecast for UK GDP growth in 2023 to 0.4%, as household spending in particular has been better-than-expected so far this year. For more information, see our latest economic forecast.