UK private sector growth eased in the three months to September, according the latest CBI growth indicator.
The composite measure – based on 710 respondents across the distribution, manufacturing and service sectors – showed the balance of firms reporting a rise in output at +10%, down from +19% in the three months to August.
The slowdown was driven by weaker growth in wholesaling, motor trades, manufacturing and business and professional services. Nevertheless, retail sales continued to grow at the fastest pace in over a year and consumer services growth remained robust.
Looking ahead, private sector growth is expected to edge higher over the three months to December, driven by stronger growth across most sectors.
The CBI growth indicator is consistent with slow and steady growth momentum as detailed in our June economic forecast, albeit with a somewhat better recent performance from consumer-facing companies helped by the warmer weather over the summer. Underlying conditions remain lacklustre, with household spending under pressure from squeezed real earnings and uncertainty restraining business investment.
Rain Newton-Smith, CBI Chief Economist, said:
“The unusually warm weather over the summer has helped lift growth overall, particularly in consumer-facing sectors. We expect slightly firmer growth over Q3 relative to Q2, but expect these temporary effects to unwind ahead, with underlying conditions remaining more subdued.
“Brexit uncertainty is still hampering business investment in the UK. Making progress on the Withdrawal Agreement will give firms temporary, but essential, breathing space for getting crucial business decisions over the line.
“With the overall trading environment remaining challenging for consumer-facing firms, the Autumn Budget must take steps to ease the burden of the business rates regime. Much needed reforms could alleviate the strain on high streets and increase the UK’s competitiveness.”
Notes to Editors:
The CBI Growth Indicator is a composite of data on output, sales and business volumes drawn from three of the CBI’s long-running qualitative UK business surveys: the Industrial Trends Survey (ITS, covering manufacturing); the Distributive Trades Survey (DTS, covering retail, wholesale and motor trades); and the Service Sector Survey (SSS, covering business, professional and consumer services).
The Growth Indicator covers the volume of output for the ITS, volume of sales for the DTS and volume of business for the SSS for the past three months and next three months.
A ‘balance’ is the difference in percentage points between the weighted percentage of firms answering that output is “up” and the percentage answering “down” (for example, if 30% of firms say that output is up, 60% that it is unchanged, and 10% that it is down, the balance statistic is +20%).