Private Sector Activity Falls But Expectations Hold Firm – CBI Growth Indicator
Image by Pawel Grzegorz from Pixabay
Private sector activity fell again in the three months to April (weighted balance of -14%, compared with -12% in the three months to March), according to the CBI’s latest Growth Indicator. Activity has now been flat or falling in our surveys since mid-2022.
Business volumes in the services sector fell at a faster pace in the quarter to April (-21% from -11% in March) driven by accelerated declines in both business & professional services (-19%) and consumer services (-30%). Elsewhere, distribution sales continued to fall modestly (-10% from -9% in March), but manufacturing output was broadly flat in April (+3% from -18%); the latter marked the firmest outturn since July 2023.
Despite weakening activity, hiring intentions within the services sector stood their ground. Both business & professional services (+12% in April, from +13% in March) and consumer services (+11%, from +17%) companies expect headcount to rise modestly over the next three months.
Price growth expectations for services firms eased in April (+19%, from +28% in March), driven by softer inflation expectations in business & professional services (+18% from +30%; and well above the long-run average of +2%) while consumer services expectations were little changed from last month (+19% from +22%).
Overall, private sector activity is expected to rise modestly over the next three months (+10%), with volumes in both services (+13%) and manufacturing (+11%) expected to see growth. Growth in services is expected to be driven by an uptick in business & professional services (+15%), and marginal growth in consumer services (+4%). But distribution sales are anticipated to be unchanged in the three months to July (0%).