Private sector growth momentum remains weak - CBI Growth Indicator

Private sector activity fell in the three months to February (weighted balance of -6%, compared with -11% in the three months to January), according to the CBI’s latest Growth Indicator. Activity has now been flat or falling since August 2022.

Services business volumes were broadly unchanged in the quarter to February (-2%, from -5% in the three months to January) as a marginal rise in business & professional services (+4%) offset falling activity in consumer services (-27%). Manufacturing output fell at a faster pace in February than last month (-19%, from -10%), while the decline in distribution sales eased (-7%, from -29%).

Overall, private sector activity is expected to rise, albeit marginally, over the next three months (+5%). Volumes across all three sub-sectors – services (+6%), distribution (+5%) and manufacturing (+4%) – are expected to see marginal growth. If this holds, it would signal the first rise in activity since July 2022.

Alpesh Paleja, CBI Lead Economist, said:

“The private sector extended a run of weak performance that began in the summer of 2022, underscoring just how challenging trading conditions have been over this period. But there is some hope on the horizon, with firms expecting a marginal improvement in activity over the next three months.

“With the private sector anticipating an upswing in the next three months, there’s an opening for the government to capitalise on that momentum and put the country on a path to sustainable growth. The upcoming Budget presents an opportunity to remove barriers to growth and double down on high-growth sectors"