Private sector growth remained steady in the three months to February (+13% from +12% in January), following a significant easing in the previous two months, according to the CBI’s latest Growth Indicator.
Growth was largely driven by an improvement across the consumer services sector, in particular the hospitality sector which returned to growth (+10% from -23%), and manufacturing output, which saw a faster rise than the previous month (+26% from +14%). This was offset by an easing across the distribution sector (+24% from +38%) and business & professional services, where activity was broadly flat (+3% from +9%).
The pace of growth across the private sector was expected to quicken in the three months ahead (+24%) – marking the first time since May 2021 that expectations were materially stronger than reported growth.
Manufacturers, business & professional services and consumer services firms expected to see a quickening in growth over the next three months, while the distribution sector was set to keep pace with results seen over the quarter to February.
The CBI Growth Indicator is a composite measure of activity, based on responses to CBI surveys. In total, 479 firms responded between 26 January and 15 February 2022.
Alpesh Paleja, CBI Lead Economist, said: “While growth overall was steady in the quarter to February, it’s encouraging that some sectors saw a faster pick-up in activity – notably manufacturing and consumer services. The strengthening in expectations likely reflected fading Omicron concerns at the time, and final Covid restrictions being lifted, with the hardest-hit businesses benefitting from an uptick in mobility and confidence.
“However, the conflict in Ukraine has cast a shadow over business confidence. The subsequent rise in global commodity prices and supply chain pressures will have an impact across the economy, at a time when businesses are already grappling with significant challenges, such as raw material shortages and other rising costs.”
With the Spring Statement just around the corner, the CBI has urged the Chancellor to ‘Go for Growth’ by targeting a 2.5% growth rate – adding around £100bn to the UK economy.
Read the CBI’s proposals to power productivity and spur innovation, investment, and energy efficiency, as well as access to critically in-demand skills here: https://www.cbi.org.uk/media-centre/articles/chancellor-s-spring-statement-must-be-the-time-to-act-or-economy-will-drift-back-to-low-growth-cbi-chief/