Firms across the private sector expect activity to fall in
the next three months (weighted balance of -20%),
extending a run of negative predictions that began in late 2024,
according to the CBI's latest Growth Indicator.
The downturn is expected to be broad-based, with business
volumes in the services sector set to decline (-18%), driven
by weak expectations in both business &
professional services (-14%) and consumer services (-31%).
Distribution sales are expected to fall
at significantly (-33%), alongside a contraction
in manufacturing output (-14%).
The disappointing outlook comes as private sector activity fell
in the three months to September (-32%). All sub-sectors reported
falling activity.
Alpesh Paleja, CBI Deputy Chief Economist,
said:
“The weakness in private sector activity doesn't show
any signs of letting up and is now expected to
persist to the end of this year. The themes cited by
businesses paint a, by now, familiar picture: demand
conditions are lacklustre, with firms feeling the knock-on impact
of cautious spending and investment behaviour across the
economy. Wrapped into this, the rise in employer NICs and
the National Living Wage continue to bite on bottom
lines. And a persistent climate of global economic
uncertainty is further hampering decision making.
“This is now accompanied by renewed nervousness
around the November Budget, with businesses
concerned about being asked to again shoulder the
burden of fixing the public finances. The business tax
burden is already at a 25-year high and the Chancellor
must quickly reaffirm last year's commitment to no
more business tax rises, avoiding Budget speculation further
curtailing sentiment in the run up to 26 November. Doing so
will boost confidence and accelerate the significant
contribution businesses want to be making to
the shared growth mission.”
Key findings from our monthly Services Sector Survey
showed:
- Business volumes in the services sector fell in the three
months to September (-35%), at a faster pace than in
the quarter to August. The latest data
marked eleven consecutive rolling quarters of
decline.
- Both business & professional services (-35%) and consumer
services (-34%) volumes fell through the quarter.
- Hiring intentions within the services sector remain weak.
Business & professional services expect headcount to
fall slightly over the next three months (-5%),
while consumer services companies expect a sharp fall
in numbers employed (-39%).
- Selling price expectations in the services sector
have accelerated relative to August and stand
above the long-run average (+14%, from +9% in August;
long-run average +7%). Inflation
expectations remain modest for business &
professional services firms (+10%) but
have picked up for consumer services (+27%).
A balance is the weighted percentage of companies reporting an
increase minus those reporting a decrease.
Full results are in the attachment accompanying this
release.
Notes to Editors:
The CBI Growth Indicator is a composite measure of activity,
based on responses to CBI surveys. In total, 824 firms
responded
between 26 August and 15 September.
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.
