UK private sector activity was broadly unchanged in the three months to April, according to the latest CBI Growth Indicator.

The composite measure, based on 615 respondents across the distribution, manufacturing and service sectors, showed the balance of firms reporting a rise in output at +3%, down from +8% in the three months to March – the weakest growth since September 2016.

The slowdown was driven by consumer services, which reported declining volumes, and distribution, which reported unchanged volumes, in contrast with healthy growth last month. Meanwhile, the manufacturing sector reported that volumes grew at a similar pace to March, while growth in business & professional services picked up slightly.

Looking ahead, the pace of growth is expected to pick-up over the three months to July (+13%), underpinned by an acceleration in growth across the board.

During this year and next, the CBI expects conditions to remain challenging for consumer-facing companies and retailers, as elevated inflation and slow wage growth continue to squeeze household budgets. Meanwhile, manufacturers should continue to benefit from the lower level of sterling and solid global economic growth. Please see the CBI’s December 2017 economic forecast for further details.

Rain Newton-Smith, CBI Chief Economist, said:

“UK private sector growth came to a near standstill at the start of the second quarter, with retailers and other consumer-facing firms reporting a fall in sales volumes. Consumers are set to remain under pressure from anaemic wage growth and elevated inflation.

“While growth is expected to pick-up, for the UK to catch-up with the global recovery, we really need to solve the UK’s sluggish productivity. Companies can learn from each other and lead their teams in adopting readily available technologies and management practices, to get to grips with this deep-seated problem.”

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%).