Private sector expects no growth in final months of 2024 - CBI Growth Indicator

Private sector firms expect no change in activity over the next three months (weighted balance of -1%), according to the CBI’s latest Growth Indicator. This marks the second consecutive rolling-quarter where survey respondents did not expect any growth over the near-term. 

The tepid picture was echoed across all major sub-sectors. Business volumes in the services sector are anticipated to be broadly unchanged (+2%), as mild growth in business & professional services (+6%) is expected to partly offset a modest decline in consumer services (-10%). Distribution sales are expected to fall (-10%) and manufacturers anticipate output to be broadly unchanged in the three months to January (-1%). 

The flat outlook comes as private sector activity fell marginally in the three months to October, though at a slower pace than in the three months to September (-4%, from -15% in September). Activity has been flat or falling since August 2022. 

Alpesh Paleja, CBI Interim Deputy Chief Economist, said:

“Our latest surveys paint a picture of an economy shifting down a gear as we head into the final quarter of 2024. Weaker growth expectations are weighing on firms’ hiring intentions, which have treaded water since the beginning of the summer. 

“In the budget, the Chancellor has an opportunity to boost confidence despite the difficult fiscal picture. Business will want to see messages of hard choices balanced with interventions that deliver a vision of optimism.  

‘Many businesses are very concerned about potential increases to Employers’ NICs and the impact it will have on pay, hiring and investment. If the government does follow through, then they will want to see the government act on other key areas of investment, such as reforming the Apprenticeship Levy   

“Giving firms certainty over future tax plans in the form of a business tax roadmap, measures to enhance productivity, and the country’s net zero trajectory can all help cement the path to long-term growth.”

Key findings from our monthly Services Sector Survey showed:

• Business volumes in the services sector were unchanged in the three months to October (+1%), after falling in September, marking 16 consecutive rolling-quarters of flat or falling volumes. Within this, business & professional services volumes rose marginally (+4%), after falling slightly in the three months to September. Consumer services volumes also fell (-9%), but at a much slower pace than in September.

• Hiring intentions within the services sector are mixed. Business & professional services expect headcount to rise marginally over the next three months (+4%), but consumer services companies anticipate numbers employed to fall (-12%).

• Price growth expectations were broadly unchanged from September (+9%) and remain close to the long-run average (+7%). Inflation expectations for business & professional services eased in October (+6%, from +13% in September), and strengthened for consumer services firms (+17%, from +9%).