Private sector growth expectations weaken – CBI Growth Indicator

Firms across the private sector expect activity to fall in the three months to September (weighted balance of -28%), according to the CBI’s latest Growth Indicator.   

Expectations are marginally weaker than May and extend a period of negative predictions for growth that began in late 2024. Predictions for growth have also deteriorated somewhat since the outbreak of the Middle East conflict at the end of February.  

Activity is expected to fall significantly in distribution (-44%), business & professional services (-26%) and manufacturing (-31%), with predictions for growth in the latter worsening materially compared to recent months. However, consumer services firms expect only a slight decrease in business volumes (-5%), marking the least pessimistic expectations since August 2024.   

The subdued outlook comes as private sector activity fell in the three months to June (-34%). All sub-sectors reported falling activity.   

Alpesh Paleja, CBI Deputy Chief Economist, said:  

“Our June surveys paint a picture of an economy that remains soft, cautious and under pressure. Weak demand, fragile confidence and persistent cost pressures still dominate the business landscape, while geopolitical uncertainty continued to hit investment and major purchasing decisions. While there are isolated pockets of resilience, particularly in aerospace and some service niches, there is little sign yet of a sustained improvement in underlying activity.  

“The latest Growth Indicator is a reminder that amid shifting political sands at home, the economy needs to remain front and centre of policymakers’ focus. Businesses are looking for certainty, not delay. The next Prime Minister should focus on the long-term decisions that will strengthen confidence and unlock investment by publishing the Defence Investment Plan, making further progress on reducing industrial energy costs and strengthening the UK's trading relationship with the EU.”   

Key findings from our monthly Services Sector Survey showed: 

Business volumes in the services sector fell in the three months to June (-34%), at a similar pace to May. 

Both business & professional services (-35%) and consumer services (-31%) volumes fell through the quarter.  

Hiring intentions within the services sector remained negative (-26%), extending the trend seen since late 2024. Business & professional services expect headcount to be cut (-19%) in the three months to September, while consumer services expect a sharper reduction (-38%). 

Selling price expectations in the services sector have eased for two consecutive months (+11% in June), falling back towards historical norms (+11%). This reflects a paring back in expectations among both business & professional services firms (+5%), and consumer services (+32%), though expectations in the latter remain elevated.

For the services sector as a whole, inflation expectations are now their weakest since November 2025.   

A balance is the weighted percentage of companies reporting an increase minus those reporting a decrease.