Private sector activity steady in the three months to December – CBI Growth Indicator

UK private sector activity was stable in the quarter to December, according to the latest CBI Growth Indicator.

The composite measure – based on 609 respondents across the distribution, manufacturing and service sectors – showed the balance of firms reporting a rise in output at +3%, broadly unchanged from +2% in the three months to November.

Falling services volumes were partially offset by strong manufacturing growth and steady distribution growth, underpinned by a solid expansion in wholesaling and motor trades. Meanwhile, retail volumes fell at the fastest pace since November 2014 in the three months to December.

Looking ahead private sector activity is expected to remain steady over the three months to March (-1%), with declining services volumes set to continue alongside slower distribution and manufacturing growth.

The latest CBI Growth Indicator is consistent with slow and steady growth momentum as detailed in our December economic forecast. Underlying conditions remain lacklustre, with household spending under persistent pressure from squeezed real earnings and Brexit uncertainty restraining business investment.

Rain Newton-Smith, CBI Chief Economist, said:

“Private sector growth appears to have tailed off towards the end of 2018 and is now pointing to a slowdown in the fourth quarter, following a stronger weather-buoyed showing earlier in the year.”

“The spectre of a no deal Brexit continues to loom large and businesses are staying extra vigilant. With less than 100 days left before the UK leaves the EU, it’s time for no deal to be taken off the table once and for all. Firms are desperate for that reassurance to continue investing and supporting job creation across all sectors of the economy.”

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%).