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CBI: Economic growth picks up, but challenges on the horizon

Private sector growth picked up pace in the three months to July, according to the CBI’s latest Growth Indicator.

Economic growth picks up, but challenges on the horizon

The survey of 687 respondents across the manufacturing, distribution and service sectors showed that growth rose to a balance of +16% in the three months to July from a balance of +6%, broadly in line with the average seen since the turn of the year.

The uptick was largely driven by consumer facing sectors, with volumes rebounding in consumer services and momentum picking up in retail. Manufacturing output also continued to rise firmly.  Meanwhile volumes in business and professional services remained flat.

Looking ahead, firms expect the pace of growth to hold broadly steady, in line with previous months this year, (+18%) over the next quarter.

Rain Newton-Smith, CBI Chief Economist, said:

“It’s good to see momentum in the economy firm up a little. However, much of the pick-up in consumer-facing sectors was likely down to the warm weather – underlying conditions are probably softer, as rising inflation eats into real earnings.

“Looking ahead, we expect softer growth, as the squeeze on household budgets continues and uncertainty weighs on business investment. But we should also see more of a boost from net trade, with strong export orders and output in our manufacturing survey.

“It’s vital the Government and business continue to invest in a modern Industrial Strategy, and work to seriously enhance productivity, to see the economy thrive in the long term.”

 

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