Private sector activity declines for fifth consecutive quarter and outlook is bleak
The private sector’s decline has continued for the fifth consecutive quarter, and outlook is bleak with it expected to fall even faster in the next three months.
New figures from the Confederation of British Industry (CBI) showed activity fell 13 per cent in the three months to December.
This is a decline at a faster rate than the previous month, which was at seven per cent.
The CBI’s latest growth indicator comes as inflation is at 11.1 per cent, and the UK economy contracted by marginally more than predicted, as outlined by the ONS this morning.
Private sector activity has now fallen for five consecutive rolling months, with the latest dip in December due to a sped up decline in consumer services volume, down to 54 per cent from -32 per cent in November.
Manufacturing output also fell slightly by nine per cent, after it returned to growth in November, at 18 per cent.
The CBI report that distribution sales also had a slower decline than November, at -12 per cent from -23 per cent, while business and professional services were “stagnant”, at -1 per cent.
Its outlook showed that private sector activity is set to fall at an even steeper pace in the next quarter, predicted to be 22 per cent. This is due to faster declines in business and professional services at 17 per cent and distribution at 30 per cent.
Worryingly, even though consumer services are set to fall at a slower pace than last month, at -40 per cent, it would still mark a “heavy decline” in volumes.
Martin Sartorius, principal economist at the CBI, said: “The decline in private sector activity over December extends a downward trend that looks set to deepen going into 2023.
“Businesses continue to face a number of headwinds, with rising costs, labour shortages, and weakening demand contributing to a gloomy outlook for next year.
“It is essential that the Government supports firms with their growth ambitions through this tough economic climate. Businesses are looking for concrete plans to support investment and put the UK on a road to a sustainable growth economy.”