No sign of post-election bounce as private sector activity continues to flatline
Activity in the private sector fell again in the quarter to February, new figures have shown.
Research by the CBI published today demonstrated the 16th consecutive quarter of falling business volumes in the UK. However, it pointed to variation across different sectors and some cause for business optimism.
The report, based on a survey of 631 businesses, showed a fall in private sector activity of seven per cent. This was an improvement on the previous month, however, where it fell by 16 per cent.
Total services went down by nine per cent and consumer services by 17 per cent, against previous falls of 12 and five respectively.
“The decline in private sector activity is slowly easing, but we’re not seeing a more substantial bounce. Nonetheless, businesses are hopeful of growth returning over the coming quarter,” said CBI lead economist Alpesh Paleja.
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The fall in business and professional services was six per cent, compared to a previous drop of 14 per cent.
Manufacturing fared better however with a fall of 11 per cent, against the previous month’s fall of 5 per cent. Retail also marked a less sharp decline, dropping 16 per cent against the previous fall of 55 per cent.
Following December’s decisive election result, it was hoped this tide could be stemmed as greater certainty returned to the Brexit process.
However, the CBI forecast an improved economic landscape going ahead.
The survey predicted most areas of the private sector will grow going forward at an overall rate of 17 per cent.
It also forecasts 1.2 per cent GDP growth in 2020 rising to 1.8 per cent in 2021.
“The wider backdrop remains one of an improvement in sentiment and investment plans,” Paleja said.
“A pro-enterprise Budget that invests in skills, infrastructure and innovation will reassure businesses that the government is committed to long-term growth — hopefully ensuring that the feel-good factor feeds through to a pickup in output and sales.”
The world economy is currently suffering from uncertainty caused by the coronavirus outbreak.
According to the CBI, it remains too soon to see what impact this will have on its predictions.