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Private sector growth is expected to rise “modestly” in the three months to November driven by an uptick in services, according to the latest survey from the Confederation of British Industry (CBI).
However, “consumer-facing businesses are still struggling” while “momentum in manufacturing remains tepid at best”, the CBI warned.
Companies in the private sector recorded a positive balance of 9% for future growth expectations, according to the CBI’s latest Growth Indicator figures.
This compared with negative expectations of –8% and –14% recorded in the rolling three months to August and July respectively.
Growth was mostly expected to come from the UK’s dominant services sector, the CBI said. A 19% uplift in business & professional services is predicted to offset a small decline in consumer services activity (–4%).
Manufacturing output is expected to grow by 9%, although expectations had “softened compared to the last couple of months”, the CBI noted. Distribution sales, meanwhile, are predicted to fall by 4%.
“It’s encouraging that business’ expectations for growth remain positive, which suggests that the recent momentum in economic growth has been sustained into the second half of this year,” said CBI interim deputy chief economist Alpesh Paleja. “But our surveys paint a very mixed picture across sectors – it’s notable that consumer-facing businesses are still struggling, and that momentum in manufacturing remains tepid at best.”
While services have been a big driver of economic growth in the UK over the past two years, high inflation and the impact of rising interest rates since 2022 have meant consumer spending is yet to return to pre-pandemic levels.
Businesses would want to see “policies which can help turn a mixed outlook into a far more positive outcome” from government in the forthcoming autumn Budget, Paleja said.
“Whether that’s reducing costs — for instance, through long-overdue business rates reform, or setting out a business tax road map to attract investment. All this can help to deliver the return to long-term sustainable growth that the new government has promised, and firms across all sectors want to see.”
The CBI’s Growth Indicator is compiled using responses from nearly 600 UK companies. The latest measure was produced from survey data collected between 26 July and 14 August.
Morning update
Samworth Brothers has recorded a £22.5m hit to operating profits, follwing the decision to shutter its Revolution Kitchen factory last year.
Its operating profits for the year ended 30 December 2023 fell by 22.2%, to £20m as a result.
The Leicestershire food manunfacturer owner attributed the slide to “costs associated with closure of a production site during 2023 and a non-cash accounting adjustment to goodwill” – understood to reference the axing of the Revolution Kitchen business.
Read the full story on thegrocer.co.uk here.
The FTSE 100 is down 0.2% to 8,357.49pts.
Early risers include Kerry Group, up 3.0% to €90.60, and McBride, up 1.5% to 133.5p.
Chief among the fallers are THG, down 2.3% to 58.1p, and Naked Wines, down 1.7% to 51.1p.
This week in the City
It’s a quiet looking week ahead in the City. British packaging company DS Smith is set to provide a first quarter trading update on Tuesday (3 September). Interim results for Hilton Food Group and Chapel Down are due on Wednesday (4 September).
The latest retail sales figures from the Office for National Statisitcs are out on Tuesday.
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