Consumer services leading pick-up in UK growth
Private sector growth in the UK continued on its upward trend in the quarter to February, according to the latest growth index from the Confederation of British Industry (CBI).
3 March 2017
The latest CBI survey of 778 companies across the manufacturing, distribution and service sectors showed consumer services led the pick-up by recording the fastest growth in business volumes since the summer of 2015.Retail sales and manufacturing output also grew at a solid pace, but the business and professional services sector saw no change in volumes.The CBI report on Friday coincided with publication of the Markit/CIPS purchasing managers’ index (PMI) for the service sector that returned a reading of 53.3 – down from 54.5 in January – though still well above the 50 mark that separates growth from contraction.
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Chris Williamson, chief business economist at IHS Markit, said, “A further slowdown in UK business activity growth in February adds to evidence that the economy has lost momentum after the impressive expansion seen at the end of last year.“Inflationary pressures remained the highest for six years as firms struggled with rising costs associated with the weak pound, but optimism about the year ahead remained elevated by recent standards.”Paul Hollingsworth, UK economist at Capital Economics, commented, “Looking ahead, the economy faces a number of headwinds, including higher inflation and uncertainty surrounding the future relationship with the EU as formal negotiations get underway.“However, we continue to think that the UK will weather these well, and expect GDP growth of 1.8 per cent in 2017 and 2.5 per cent in 2018.”For related news and features, visit our Corporate finance section.Access hundreds of global services and suppliers in our Online Directory
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Business confidence
Looking to the future, the CBI survey showed confidence among companies of continued growth over the coming quarter. Rain Newton-Smith, the organisation’s chief economist, said, “The economy is growing solidly, with consumer-facing sectors leading the way for now. And it’s encouraging that firm growth is expected to continue over the next three months.“However, with inflation set to rise even further, this will dampen households’ spending power and growth is likely to slow as the year progresses. Rising costs will add to the pressures on businesses too, so they will be looking for a steady hand on the tiller at the Budget and action on the rising burden from business rates.“By committing to invest in skills and innovation, through a truly modern industrial strategy, the Chancellor can take long-term steps to set the British economy on the right path for the future.”Economic growth
The PMI for the service sector, which accounts for more than three-quarters of the UK economy, indicated overall growth in the national economy of 0.4 per cent in the first quarter of 2017, according to Markit.Related news:
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Chris Williamson, chief business economist at IHS Markit, said, “A further slowdown in UK business activity growth in February adds to evidence that the economy has lost momentum after the impressive expansion seen at the end of last year.“Inflationary pressures remained the highest for six years as firms struggled with rising costs associated with the weak pound, but optimism about the year ahead remained elevated by recent standards.”Paul Hollingsworth, UK economist at Capital Economics, commented, “Looking ahead, the economy faces a number of headwinds, including higher inflation and uncertainty surrounding the future relationship with the EU as formal negotiations get underway.“However, we continue to think that the UK will weather these well, and expect GDP growth of 1.8 per cent in 2017 and 2.5 per cent in 2018.”For related news and features, visit our Corporate finance section.Access hundreds of global services and suppliers in our Online Directory
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