Light At The End Of The Tunnel For Private Sector Growth Momentum - CBI Growth Indicator
Image by Gerd Altmann from Pixabay
Private sector activity fell again in the three months to March (weighted balance of -12%, compared with -6% in the three months to February), according to the CBI’s latest Growth Indicator. Activity has now been flat or falling for 20 consecutive rolling-quarters.
Business volumes in the services sector fell at the fastest pace since January 2023, (-11%, from -2%). This was driven by declines in both consumer services (-17%) and business & professional services volumes (-10%), the latter picking up on last month. Elsewhere, the pace of declines in both manufacturing output (-18% from -19%) and distribution sales (-9% from -7%) were broadly unchanged from last month.
Within the services sector, the weak picture on activity stood in contrast to firmer employment expectations. Business & professional services companies expect headcount to rise over the next three months (+13%, unchanged from the three months to February) while consumer services also expect headcount to grow, in a reversal from last month (+17%, from -17%).
Price growth expectations for services firms strengthened in March (+28%, from +19%): driven by an acceleration in business & professional services (+30% from +19%; and well above the long-run average of +2%) while consumer services expectations were little changed from last month (+22% from +21%).
Overall, private sector activity is expected to rise modestly over the next three months (+11%). Volumes across all three sub-sectors – services (+14%) manufacturing (+8%) and distribution (+6%) – are expected to see growth. Though within the services sector, consumer services firms still expect a small decline in activity (-6%).