Private sector growth accelerates over summer but 'tepid' period awaits

Growth of the UK’s private sector increased in the three months to August due to stronger growth in business & professional services and distribution, according to the CBI.

The balance of the 698 respondents reporting a rise in output was at +19%, up from +14% in the three months prior to July, as retail volumes grew at their fastest pace in a year.

The CBI's growth indicator is compiled through the amalgamation of the results from three long running qualitative UK business surveys.

Rain Newton-Smith, CBI chief economist, said: “As the boost from the hot summer fades, we expect to see a return to more subdued growth for retailers as consumer incomes struggle. And while manufacturers continue to be supported by healthy global demand and the weak pound, the threat of escalating trade tensions and uncertainty around Brexit hang over the outlook.”

Private sector growth is expected to slow to +13% over the three months to November as growth calms in business & professional services and distribution.

Further ahead, the CBI said growth is projected to be “tepid” but steady, with household spending still under pressure from squeezed earnings and Brexit uncertainty shackling business investment.

“In this climate of uncertainty, we need action to get the UK economy on the front foot. The UK’s congested transport network needs unclogging to help unlock growth across the UK’s regions and nations. Increasing the funding available for practical, local infrastructure projects and reducing funding fragmentation could help lift productivity and prosperity,” said Newton-Smith.