The composite measure, based on 512 respondents, reported the tenth consecutive rolling quarter of flat or falling volumes. This month’s result reflected a continued decline in services and distribution volumes (the latter caused by the fastest decline in retail sales since February 2009), amid flat manufacturing output.
Looking forward, private sector activity is expected to drop at a faster pace in the quarter to November (-13%) – the weakest expectations since December 2011. The decline is driven by expectations of a faster decline in services volumes alongside a continued fall in distribution volumes, with output expected to remain flat in manufacturing.
Across the economy more broadly, growth has been volatile in the first half of 2019, driven by companies stockpiling ahead of previous Brexit deadlines and a change in the timing of car plant annual shutdowns. We expect the economy to grow modestly further ahead. However, a no-deal Brexit would likely hit activity and financial markets significantly. For more detail, see our July economic forecast.
Rain Newton-Smith, CBI Chief Economist, said:
“The economic alarm bells are ringing louder and louder. It is worrying that the dominant services and the retail sectors are struggling to cope with Brexit uncertainty and falling investment, while also having to shoulder the burden of an outmoded business rates system. And with activity expected to drop further next month, there is no let-up in sight.
“The best remedy for this malaise remains getting a deal with the European Union that secures jobs and shores up the strengths of our economy. The Government has to strain every sinew to make this a reality.
“It should also use this week’s Spending Review to invest in education, infrastructure and low carbon technologies to boost the UK’s competitiveness over the long-run.”