Private sector activity expected to fall for fourth consecutive quarter – CBI Growth Indicator

Business volumes in the services sector are anticipated to decline (-23%), driven by a predicted fall in business & professional services (-14%) and the weakest expectations for consumer services (-55%) since September 2022. Distribution sales are also expected to fall significantly in the three months to May (-24%). But in contrast, manufacturers anticipate output to return to growth (+8%).

The weak outlook comes as private sector activity fell again in the three months to February (-27%), at a faster pace than the quarter to January (-23%). All sectors reported falling business volumes.

Alpesh Paleja, CBI Deputy Chief Economist, said:

“There are some glimmers of hope in our latest surveys. Growth expectations have become marginally less negative, driven by a predicted return to growth in the manufacturing sector. But overall, the data still paints a picture of a tough operating environment for businesses, with consumer-facing sectors faring particularly badly.

“We do expect some tailwinds to growth over the year ahead. Rising real incomes will hopefully give households more confidence to spend, giving some relief to the sectors suffering the most. But as our latest surveys highlight, more action is needed to rev up growth momentum.

“Private sector businesses are looking to the government to take steps to restore confidence and encourage investment - whether through long awaited reforms to the apprenticeship levy, increased incentives for occupational health, or changes to business rates. Further ahead, companies want to see an industrial strategy which offers the stability and certainty needed to drive innovation and investment, as well as fostering sustainable economic growth that benefits both businesses and households.”