Private sector firms once again expect activity to fall in the three months to July (weighted balance of -21%), according to the CBI’s latest Growth Indicator. Expectations are broadly unchanged relative to last month.
Business volumes in the services sector are anticipated to decline (-26%), with expectations at their weakest since November 2022.
The anticipated fall is driven by predictions of decline in both business & professional services (-22%, also the weakest since November 2022) and consumer services (-41%) volumes.
Distribution sales are also expected to fall in the three months to July (-23%), but manufacturers anticipate output to fall only slightly (-5%).
The tepid outlook comes as private sector activity fell again in the three months to April (-19%), but at a somewhat slower pace relative to March.
Alpesh Paleja, Deputy Chief Economist, CBI, said, “Private sector activity remains subdued, with our surveys pointing to weaker economic momentum than implied by official data.
“Uncertainty has ramped up over the last few weeks, following the back-and-forth on tariffs levied by the US and, subsequently, big movements in financial markets. Global volatility is another drag on business sentiment, already hit by the rise in National Insurance Contributions and the National Living Wage, and continued concern over the Employment Rights Bill.
“The combined impact on hiring and investment plans means that it’s more important than ever for the government to focus on the growth levers that it can control. Businesses need to see the government using the forthcoming industrial strategy and spending review to prioritize key measures to unlock growth. Whether that’s reforming the apprenticeship levy to give employers greater flexibility or setting a world leading goal for R&D investment – these could provide a much-needed kickstart to the economy in these difficult times.”
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