Private sector activity continued to fall in the three months to July, albeit at a slightly slower pace, with the balance of firms reporting growth at -9% according to the latest CBI monthly Growth Indicator. This marked the ninth consecutive rolling quarter of flat or falling volumes.
The composite measure, based on 544 respondents, reported a slower decline in services volumes amid a faster fall in both distribution and manufacturing volumes. The decline in distribution was broad-based across all three sub-sectors.
Looking ahead, private sector growth is expected to pick up in the three months to October (+9%), reflecting a recovery in services and manufacturing growth. Distribution volumes are set to be flat next quarter, although retail volumes are expected to grow again.
The CBI Growth Indicator suggests a subdued start to Q3, following other recent data which suggests UK economic growth slowed noticeably in the second quarter of 2019, as the boost from stockpiling activities at the start of the year fades. For more detail on our view of the outlook, see our economic forecast.
Annie Gascoyne, CBI Director of Economic Policy, said:
“A new Prime Minister marks a fresh start and early signals matter. Business is looking for a Brexit deal that unlocks confidence; clear signals the UK remains open to the world; and a willingness to work together with business on issues ranging from climate change to digital connectivity.
“More broadly, we expect underlying growth to remain subdued with risks from Brexit and global trade tensions remaining high.”