Growth in the UK’s private sector slowed in the three months to March, according to the latest CBI Growth Indicator.
The composite measure, based on 650 respondents across the distribution, manufacturing and service sectors, showed the balance of firms reporting a rise in output at +8%, down from +20% in the three months to February.
The slowdown in growth was driven by the services and manufacturing sectors. Although growth in the distribution sector was broadly unchanged, retail sales volumes were flat, continuing the pattern of stagnant or falling sales volumes since October last year.
Looking ahead, the pace of growth is expected to accelerate over the three months to June (+18%), underpinned by a pick-up in retail and services volumes, coupled with firm growth across all other sub-sectors.
During this year and next, the CBI expects conditions to remain challenging for consumer-facing companies and retailers, as higher inflation and slow wage growth continue to squeeze household budgets.
Meanwhile, manufacturers should continue to benefit from the lower level of sterling and solid global economic growth. Please see the CBI’s December 2017 economic forecast for further details.
Rain Newton-Smith, CBI Chief Economist, said:
“Slower growth underlines the challenges we’re seeing in consumer-facing sectors, which are most exposed to the squeeze on household budgets. Growth in manufacturing has also lost some steam compared with recent highs.
“Firms will welcome the agreement of a transition period with the EU, which will hopefully stop some firms’ contingency plans and help others continue investing.
“But uncertainty remains, so it’s vital the Government provides the best environment for enterprise by partnering with business on industrial strategy, and fixing the apprenticeship levy to make it easier for firms to deliver high quality training.”
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%).