Private sector growth expectations soften – September 2024 growth indicator

Private sector firms expect no change in activity over the next three months (weighted balance of 0%), according to the CBI’s latest Growth Indicator. This month’s findings end a run of seven consecutive surveys in which growth expectations had been positive.

However, the headline number masks divergence between different sectors. Business volumes are anticipated to pick up marginally in services (+4%), as growth in business & professional services (+7%) offsets a modest decline in consumer services (-9%). Both distribution sales (-4%) and manufacturing output (-7%) are also expected to fall marginally in the three months to December (-7%), the latter marking the first time that manufacturers haven’t expected growth in ten months.

A softening in the outlook comes after activity fell in the three months to September (-15%). The decline was broad-based, with all three major sectors reported falling volumes.

Alpesh Paleja, CBI Interim Deputy Chief Economist, said: 

“After a run of positive expectations, the outlook for growth for the rest of this year has deteriorated. While consistent with our expectation for softer growth momentum going into the second half of 2024, the divergent outlook across sectors highlights just how uneven the UK’s recovery has been so far.

“This reinforces the fact the government needs to use the forthcoming Budget to build momentum behind the economic recovery and give businesses the confidence they need to invest. Pressing ahead with reforms to planning, publishing a business tax roadmap and delivering a clear and comprehensive industrial strategy would all help to achieve that goal.”

Key findings from our monthly Services Sector Survey showed: 

• Business volumes in the services sector fell in the three months to September (-13%), after being broadly unchanged in August, marking over two years of generally flat or falling volumes. Within this, business & professional services volumes fell (-7%), after being unchanged in August. Consumer services volumes declined more sharply (-37%), and at the fastest pace since January 2023.
• Hiring intentions within the services sector are mixed. Business & professional services expect headcount to rise marginally over the next three months (+5%), but consumer services companies anticipate a sharp fall in numbers employed (-29%).
• Price growth expectations for services firms ticked up in September (+12%) and were above their long-run average (+6%). Inflation expectations for business & professional services firms picked up somewhat (+13%, from +2% in August), and weakened for consumer services firms (+9%, from +17%).