Private sector activity stagnant - CBI Growth Indicator

The composite measure, based on 498 respondents across the distribution, manufacturing and service sectors, reported a balance of -1%.

May’s outturn reflected a continued decline in services volumes, balanced out by a pick-up in growth in distribution and steady manufacturing growth. Within distribution, retail sales volumes continued to grow at a pace far above the long-run average.

Looking ahead, private sector activity is expected to remain flat over the three months to August (-1%), reflecting unchanged volumes across the board.

The economy as a whole grew strongly in Q1 2019, although this was at least in part driven by pre-Brexit stockbuilding. Business surveys suggest that underlying conditions were more subdued, and have remained tepid going in Q2, as Brexit uncertainty continues to bite on activity. For more detail on our view of the outlook, see our economic forecast.

Alpesh Paleja, CBI Principal Economist, said:

“Private sector activity remains stuck in neutral, with conditions in the service sector notably weak. Businesses continue to cite the ongoing drag from Brexit uncertainty, which is holding back key projects, pipelines of work and investment. With no resolution in sight, activity is once again set to stay flat over the next three months.

“To shift the economy up a gear, Parliament urgently needs to agree on a Brexit deal with the EU, and firmly rule out a damaging no deal scenario. This will allow us to focus on domestic priorities, including moving forward on Industrial Strategy, prioritising delivery of key infrastructure projects and tackling climate change.”