The slight fall in overall volumes reflected a continued decline in services volumes and a further deceleration in growth in manufacturing and distribution. Within distribution, retail volumes fell again in the quarter to March for the fifth consecutive rolling quarter.
This comes off the back of another week of worrying economic data:
- The CBI’s Financial Services Survey showed that optimism plummeted at the fastest rate since the depths of the Financial Crisis in the three months to March. Additionally, business volumes and employment have fallen over the last quarter.
- The CBI’s Distributive Trades Survey showed retail sales volumes fell sharply (-18%) in the year to March, the fastest contraction in 17 months and marking a four-month run in which sales have not grown.
- The Society of Motor Manufacturers and Traders pointed to car production sinking to a 6-year low.
- According to the Recruitment and Employment Confederation, employers’ confidence in the UK’s economic prospects hit their lowest level ever in March
- The Federation of Small Businesses’ (FSB) latest survey showed falling revenues in the first quarter of the year – at an all-time high. Export expectations for the next three months also fell to their lowest point in the FSB small business index’s nine-year history, while 90 per cent of firms paused recruitment.
Rain Newton-Smith, CBI Chief Economist, said:
“The weight of evidence coming from across different industries is damning. The chaos at Westminster is having a dire impact here and now on our economy, with private sector activity stuck in a slump.
“Every day counts, or we’ll see this story repeated again and again with investment lost and businesses coming under severe pressure.
“Politicians across the House must get their act together to find a way forward that will protect jobs and livelihoods.”
Looking ahead, private sector activity is expected to be relatively flat over the three months to June (+2%), with volumes expected to stabilise in services, alongside similar growth in both distribution and manufacturing.
The CBI Growth Indicator is consistent with our expectation for weak growth as detailed in our December Economic Forecast. Underlying conditions remain subdued, reflecting weak household income growth and intensifying Brexit uncertainty.