The private sector gained momentum toward the end of the year, according to survey figures released this morning.
The Confederation of British Industry’s (CBI) growth indicator strengthened in the final three months of 2015, with growth driven by the services sector. Manufacturers continued to struggle, the CBI said.
The difference between the percentage of firms reporting a rise in output and those reporting a decline rose to 20 per cent, suggesting output rose at a quicker rate than in the three months to November when the difference was 13 per cent – a 28-month low.
While the balance is weaker compared with the last few years, during which time the economy grew faster than many other advanced economies, it is above its long run average of five per cent.
The 766 respondents to the survey expect output to grow at a similar pace over the next three months as it has done over the previous three.
“The UK economy has finished the year strongly, with business services acting as a lightning rod for growth,” said CBI director-general Carolyn Fairbairn.
Yet Fairbairn warned there was no room for complacency this year. She said: “Ultimately, employers want relief from the cumulative burden that could harm the UK’s competitiveness, as the combined effect of the introduction of the apprenticeship levy and the national living wage begins to bite against the backdrop of unreformed business rates and the administrative challenge of pensions enrolment.”
Weakness was noticeable in the manufacturing sector, which reported a decline in output over the last three months. The CBI said the near-term outlook for the sector, which makes up about 12 per cent of the economy’s output, “remains poor”.