Pace of decline in private sector activity continues to ease

Private sector activity in the UK, fell in the three months to August, but at a slower pace than last month according to the Confederation of British Industry’s (CBI) monthly growth indicator.

It is the second consecutive month, where the composite measure showed an easing in the pace of decline in activity from the survey’s record low of -71% in the three months to June.

The survey, based on 668 respondents between 27 July and 14 August, saw business and professional services activity fall to -32% in the quarter August from -50% previously.

According to the indicator, consumer services activity dropped to -64% from -88%, distribution sales to -26% from -47% and manufacturing output to -46% from -59% in July.

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CBI lead economist, Alpesh Paleja, said: “The fall in private sector activity has continued to slow, as more firms reopen for business. Nevertheless, activity remains well below “normal” levels, and recent CBI surveys have revealed heavy job cuts across the economy.

“Clearly, we aren’t out of the woods yet. The next few months mark a crunch point for businesses, with cash flow issues biting, the risk of a second wave and uncertainty over the outcome of Brexit negotiations. A bold plan is needed for all of these issues, in order to establish a sustainable economic recovery.”

Additionally, CBI predicts the pace of decline to ease again over the next quarter (-11%), reflected in predictions of a slower fall in consumer services to -42%.

Meanwhile, distribution is expected to fall to -11% and manufacturing to -10%, whereas business and professional services expect business volumes to stabilise in the three months to November to -1%.

CBI’s Monthly Growth Indicator composes data on output, business volumes and sales drawn from three of the group’s qualitative UK business surveys: the Industrial Trends Survey — covering manufacturing— the Distributive Trades Survey — covering retail, wholesale and motor trades — and the Service Sector Survey — covering business, professional and consumer services.

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