3 March 2019


Private sector growth stagnates in quarter to February - Growth Indicator

UK private sector activity was broadly unchanged in the quarter to February, according to the latest CBI Growth Indicator.

Private sector growth stagnates in quarter to February - Growth Indicator

The composite measure – based on 650 respondents across the distribution, manufacturing and service sectors – showed the balance of firms reporting growth stood at -3%, the weakest since April 2013. This marked the fourth consecutive month of no growth in activity.

The stagnation in overall volumes reflected falling services volumes and slower manufacturing growth, which were partially offset by a rebound in distribution growth. Within distribution, retail volumes continued to fall, for the fourth consecutive month.

Looking ahead, private sector activity is expected to fall slightly over the three months to May (-4%), with services volumes set to fall at a sharper pace alongside similar manufacturing growth. Meanwhile, distribution volumes growth is expected to pick-up.

The CBI Growth Indicator is consistent with slow momentum as detailed in our December Economic Forecast. Underlying conditions remain subdued, with household spending under persistent pressure from squeezed real earnings and the prospect of a no-deal Brexit tightening the vice on business investment.

Rain Newton-Smith, CBI Chief Economist, said:
“Economic momentum is ebbing away as consumer confidence weakens and businesses brace themselves for the possibility of a no-deal Brexit. More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic.

“Until politicians can agree a deal that commands a majority in Parliament and protects our economy, growth will continue to suffer and long-term damage will be done. Politicians must steer our country away from the cliff edge to avoid further lost jobs and investment.”

Notes to Editors:

The CBI Growth Indicator is a composite of data on output, sales and business volumes drawn from three of the CBI’s long-running qualitative UK business surveys: the Industrial Trends Survey (ITS, covering manufacturing); the Distributive Trades Survey (DTS, covering retail, wholesale and motor trades); and the Service Sector Survey (SSS, covering business, professional and consumer services).

The Growth Indicator covers the volume of output for the ITS, volume of sales for the DTS and volume of business for the SSS for the past three months and next three months.

A ‘balance’ is the difference in percentage points between the weighted percentage of firms answering that output is “up” and the percentage answering “down” (for example, if 30% of firms say that output is up, 60% that it is unchanged, and 10% that it is down, the balance statistic is +20%).