Weakness in private sector activity set to continue - CBI Growth Indicator
31 August 2023
Private sector activity fell again in the three months to August, marking a full year of declining or flat activity, according to the CBI’s latest Growth Indicator. Manufacturing was a particular weak spot, reporting its sharpest contraction in output since September 2020 (-19%).
Services also saw a continued downturn in the quarter to August, with business volumes falling at a broadly similar pace to last month (-6% from -8% in July). This reflected another notable contraction in consumer services (-22%) but volumes in business & professional services were broadly unchanged (-2%). Meanwhile, distribution sales stabilised after three rolling quarters of decline (-2%).
Looking ahead, activity is expected to continue falling at a broadly similar pace over the next three months (-6%). Output is expected to stagnate in manufacturing (-3%) and continue to fall slightly in services (-7%) and distribution (-8%).
Alpesh Paleja, CBI Lead Economist, said:
“Activity remains weak in the private sector, reflecting difficult trading conditions for businesses and the growing impact of the higher cost of credit. The weakness in manufacturing and consumer services is particularly a stark indication of just how challenging things are.
The upcoming Autumn Statement will need to be mindful of continually challenging conditions for businesses, and ongoing pressure on households from high inflation. It will also need a renewed focus on building the productive capacity of the economy, which is the surest way to drive up growth and living standards”
31 August 2023
Notes to Editors
The CBI Growth Indicator is a composite measure of activity, based on responses to CBI surveys. In total, 698 firms responded across our surveys between 26 July and 14 August
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/sales/business 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%).