UK private sector activity drops in August for first time since early 2021

Activity levels in the UK's private sector fell over the preceding three months, marking the first decline since March 2021, a leading business lobby group said.

The Confederation of British Industry's Growth Indicator fell to a reading of -5% for the three months to August, from +8% for the quarter to July.

"The worsening cost-of-living crisis – set to escalate further when the new energy price cap comes into effect – is putting the brakes on private sector activity," said Alpesh Paleja, CBI lead economist.

"[...] With even tougher months ahead, it’s imperative that government acts decisively and at pace to support vulnerable households and businesses – and to lay the foundations for renewed economic momentum."

Distribution sales managed to buck the trend with the corresponding indicator rising from +3% to +7%.

However, that for business and professional services retreated from +19% to -1%, manufacturing output from +6% to -7% and consumer activity from -37% to -4%.

The pace of decline in activity was expected to accelerate over the following quarter to -12%, led by a worsening in business and professional services activity, a growth indicator for which fell to -16%.

Distribution sales and factory production meanwhile were seen broadly flat while at -29% the pace of decline in consumer services activity was seen slowing.