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May 29, 2023
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UK private sector growth eases off

UK private sector growth eased within the 12 weeks to September, according the newest CBI growth indicator.

The composite measure – based on 710 respondents all over the distribution, manufacturing and service sectors – showed the of firms reporting a boost in output at +10%, down from +19% inside the three months to August.

The slowdown was driven by weaker rise in wholesaling, motor trades, manufacturing and business and professional services. Nevertheless, retail sales grew even larger along at the fastest pace in more than a year and consumer services growth remained robust.

Looking ahead, private sector growth is expected to edge higher on the 90 days to December, driven by stronger growth across most sectors.

The CBI growth indicator is in step with very slow but steady growth momentum as detailed inside our June economic forecast, albeit which includes a somewhat better recent performance from consumer-facing companies helped because of the warmer weather above the summer. Underlying conditions remain lacklustre, with household spending under time limits from squeezed real earnings and uncertainty restraining business investment.

Rain Newton-Smith, CBI Chief Economist, said: “The unusually summer over the summer has helped lift growth overall, especially in consumer-facing sectors. We expect slightly firmer growth over Q3 relative to Q2, but expect these temporary effects to unwind ahead, with underlying conditions remaining more subdued.

“Brexit uncertainty continues to be hampering business investment in the UK. Making progress within the Withdrawal Agreement will give firms temporary, but essential, breathing space getting crucial business decisions within the line.

“Using the overall trading environment remaining challenging for consumer-facing firms, the Autumn Budget have got to take steps to ease the burden with the business rates regime. Important reforms could alleviate the burden on high streets and boost the UK’s competitiveness.”

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