Private sector activity fell again in the three months to August, marking a full year of declining or flat activity, according to the CBI’s latest Growth Indicator.
Manufacturing was a particular weak spot, reporting a contraction in output of almost 20% – the sharpest isince September 2020 (-19%).
Services also saw a continued downturn in the quarter to August, with business volumes falling at a broadly similar pace to last month (-6% from -8% in July). This reflected another notable contraction in consumer services (-22%) but volumes in business & professional services were broadly unchanged (-2%). Meanwhile, distribution sales stabilised after three rolling quarters of decline (-2%).
Looking ahead, activity is expected to continue falling at a broadly similar pace over the next three months (-6%). Output is expected to stagnate in manufacturing (-3%) and continue to fall slightly in services (-7%) and distribution (-8%).
Alpesh Paleja, CBI Lead Economist, said: “Activity remains weak in the private sector, reflecting difficult trading conditions for businesses and the growing impact of the higher cost of credit. The weakness in manufacturing and consumer services is particularly a stark indication of just how challenging things are.
The upcoming Autumn Statement will need to be mindful of continually challenging conditions for businesses, and ongoing pressure on households from high inflation. It will also need a renewed focus on building the productive capacityof the economy, which is the surest way to drive up growth and living standards”
