Private sector activity was flat in the three months to May (weighted balance of +2% compared with -14% in the three months to April), according to the CBI’s latest Growth Indicator. This marks the firmest outturn since July 2022.
The improvement in activity was driven partly by a stabilisation in services business volumes (-1% from -21% in April), reflecting marginal growth in business & professional services (+4%), offset by a continued decline in consumer services (-23%). Distribution sales were also flat (+1% from -10%) – the firmest result in over a year – while manufacturing output rose for the first time since November 2022 (+14% from +3%).
Firms’ expectations for growth over the next three months remain positive (+7%), albeit easing a little on the two months prior. Expectations are for modest but broad-based growth, with activity anticipated to rise across all sub-sectors: distribution (+9%), manufacturing (+7%), and services (+7%).
Alpesh Paleja, CBI Lead Economist, said: “After such a prolonged period of subdued activity, it’s encouraging to see things start to stabilise across the private sector. That expectations for growth remain positive should give further reassurance that things are heading in the right direction, alongside our survey data showing that hiring intentions are holding up.
“But the recovery remains in its early stages, and firms in some sectors – particularly consumer-facing ones – continue to struggle. With a date now set for a General Election, we need all parties setting out clear policies to reduce business costs, attract investment and deliver a return to long-term sustainable growth.”