UK private sector activity flatlines – latest growth indicator

Economic activity in the UK private sector was flat in the quarter to April 2019, and is expected to pick up only slightly over the summer, according to the latest monthly growth indicator from the Confederation of British Industry (CBI).

The composite measure, based on 532 respondents across the distribution, manufacturing and service sectors, showed the balance of firms reporting growth as 0%, marking a sixth consecutive rolling quarter of flat or falling volumes.

Activity continued declining in business and professional services, balanced by a pick-up in growth in manufacturing and distribution. Within distribution, retail sales recovered after falling for five consecutive rolling quarters, possibly due to the Easter trading period.

Looking ahead, private sector activity is expected to pick up only slightly over the three months to July (+5%), reflecting a recovery in services volumes.

The CBI’s growth indicator suggests that underlying economic activity remains subdued, chiming with other business surveys. While GDP growth in Q1 is likely to see a temporary boost from stockpiling, the CBI’s view of the outlook ahead remains unchanged. For more detail, see the CBI’s latest economic forecast.

Fog of uncertainty needs to be lifted

CBI Chief Economist Rain Newton-Smith commented: “Underlying growth remains subdued, highlighting the need for the fog of uncertainty to be lifted so businesses can plan and invest with confidence, allowing the UK to tackle issues other than Brexit.

“As recent protests have highlighted, climate change requires urgent attention and global leadership. There are plenty more projects, from combating underperforming productivity to making our workforce match fit for the future, which are left unfinished while the current Brexit impasse continues.

“Getting growth going again needs a relentless focus on the UK’s domestic agenda and progression to the second stage of talks with the EU, our biggest trading partner. Time-wasting is not an option.”

For advice on limited the damage caused by the current uncertainty over Brexit, email me or call me on 020 7099 2621.