UK growth slips at start of year – CBI
Economic growth weakened in the three months to January, with modest expectations for the next quarter, according to the latest CBI Growth Indicator.
The survey of 759 respondents across the manufacturing, retail and services sectors showed the pace of growth dropped to its slowest rate since May 2013 (when the balance was +2%), with a balance of +6% of firms reporting a rise in output.
The slowdown was mainly driven by the business & professional services sector – which includes management & legal services and telecoms & computing – where output growth eased to a near three-year low. In the manufacturing sector, output and new orders were flat, but growth in the consumer services sector held up, and retail sales volumes grew at an above average pace.
The outlook for the next three months is more positive, with an above average rise in output (+13%) expected.
Rain Newton-Smith, CBI Director of Economics, said:
“The economy has had a tough start to year. Manufacturing and business and professional services have struggled to make a mark, but a healthier picture can be seen in the household-focused consumer services and retail sectors.
“The overall domestic outlook still looks fairly secure, and a rise in output across all sectors is expected in the coming three months. Low inflation, strong employment growth and rises in real pay also put households in a good position.
“But we’ll need to keep watch on whether slower growth in parts of the service sector is the start of something more prolonged, particularly in light of global financial market volatility.”