Private sector activity falls at fastest pace in 10 years

The composite measure, based on 624 respondents, reported the fourteenth consecutive rolling quarter – equivalent to one year and two months – of flat or falling volumes. The deterioration in this month’s survey reflected a faster decline in business volumes across all sectors (manufacturing, distribution including retail, consumer and business & professional services).

Looking forward, private sector activity is anticipated to stabilise in the quarter to March 2020 (+1%). Volumes in business and professional services are expected to grow slightly while retail volumes are tipped to stabilise. Meanwhile, consumer services and manufacturing volumes are set to fall at a slower pace.

According to the CBI’s December economic forecast, UK economic growth looks set to improve gradually from 2020, on the assumption that Brexit uncertainty diminishes and global growth revives. GDP is forecast to grow by 1.2% in 2020 (after estimated growth of 1.3% in 2019), with a somewhat brighter outlook for 2021, with growth picking up to 1.8%. For more detail, see our December economic forecast.

Anna Leach, CBI Deputy Chief Economist, said:

“Our surveys suggest that the UK’s private sector activity has fallen at the fastest pace since the financial crisis in December. This should be a matter of grave concern with marked falls in every sector of the economy, and the next quarter providing only a slither of optimism.

“With the General Election having delivered a stable majority, and firms having certainty on the UK’s departure from the EU next month, the Government must now work quickly to give a renewed focus to domestic priorities, which will give the economy the boost it is crying out for.”