Economic growth takes off in quarter to May

In the three months to May, private sector activity across the economy grew at its fastest pace since August 2015 – with a balance of +30% up from just +1% last month. That’s according to the CBI’s latest monthly Growth Indicator.

Business & professional services activity grew at a survey record pace (+50% from +5%), while distribution sales (+35% from -8%) and manufacturing output (+18% from +3%) increased at the fastest rates since August 2018 and December 2018 respectively. Consumer services volumes fell (-19% from -2%), largely driven by travel and leisure firms, many of which were still unable to open when our May surveys were in field.

Expectations are that private sector growth will accelerate even further in the coming three months (+42%). If these expectations were to be met, it would be the fastest rate of economic growth on record (since October 2003). All sectors anticipate strong growth over this period - business & professional services (+52%), consumer services (+33%), manufacturers (+33%) and distribution firms (+37%).

The composite measure featured responses from 552 firms between 27 April and 17 May.

Alpesh Paleja, CBI Lead Economist, said:

“As the country slowly but surely reopens, the economy has really taken off. Most sectors have seen a real uplift in activity in recent months and believe that the outlook for the summer is strong.

“The same cannot be said for consumer services during this time, which is understandable given continued restrictions. All eyes will be on the Government’s decision on step 4 of the roadmap, to further help the likes of hospitality, leisure and tourism make the most of summer.

“As and when restrictions lift further, we shouldn’t lose sight of how fragile the situation will remain for some businesses, and the Government will need to keep a watching brief of what support may need to continue.”