Home Business News Private sector activity continued to fall in the three months to November

Private sector activity continued to fall in the three months to November

by LLB Finance Reporter
5th Dec 22 10:00 am

Private sector activity fell in the three months to November (-7%), according to the CBI’s latest Growth Indicator, albeit at the slowest pace since the three months to August.

Over the last quarter, the distribution sector was the only one to see a faster decline in activity (-23% from +8% in October), with retail sales – a key sub-sector – slumping after last month’s growth (-35% from +24%).

Service sector activity also fell in November (-10% from -26%) on the back of a heavy fall in consumer services (-32% from -49%) and stagnation in business & professional services (-2% from -19%). Manufacturing was the only bright spot this month, posting solid output growth following three months of contraction (+18% from -4% in October).

Looking to the quarter ahead, private sector activity on the whole is expected to fall at a far quicker pace (-27% from -7% in November). The outlook for all sectors is similarly pessimistic: services activity (-34% from -10%), manufacturing output (-10% from +18%), and distribution sales (-24% from -23%) are all expected to decline significantly over the next three months – in most cases at a faster pace.

The weaker outlook is echoed in investment intentions data from our November surveys. For the year ahead, capital spending plans have deteriorated across all sectors, and are now at their weakest either since 2020 or early 2021.

Alpesh Paleja, CBI Lead Economist, said, “The slower decline in private sector activity over November doesn’t look like it’ll last into the new year, with a heavier fall expected in the next three months.

“While the Autumn Statement brought some cheer in the form of a business rates freeze, rising costs and weakening demand are still weighing heavily on business operations – leading to a gloomy outlook across all sub-sectors.

“Despite the gloom, many firms haven’t given up on growth ambitions for next year. Instead, they’re looking to government to match those ambitions by using zero cost levers – like regulatory and planning reform, easing access to skills, and providing greater tax clarity – to help give the economy the pro-growth boost it urgently needs.”

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