WIREDGOV

UK economic growth raced ahead in the three months to May, reaching its strongest rate for a year, and the fast pace of growth is expected to continue.

The CBI’s latest Growth Indicator, out yesterday (Sunday), shows growth quickened in all three main sectors. It was modest in the manufacturing sector, and strong in the retail sector, but business & professional services was the stand-out performer. It recorded its fastest growth in business volumes since early 2006*, and was the main driver of the overall acceleration in growth.

In the next three months, the swift pace of growth is expected to continue but the balance between sectors is likely to change. Responses from firms indicate the stellar growth in the business & professional service sector will slow but remain robust. That will be made up for by stronger growth in the consumer services, retail and manufacturing sectors.

The Growth Indicator, derived from CBI surveys of 811 businesses, brings together economic activity data from a range of business sectors. The reading of +33% for the three months to May was sharply up on the three months to April (+19%). And is the highest balance since May 2014 (+35%).

The balance of expectations for output growth over the next three months (June – August) is +30%. That is the strongest expectation since August last year (+38%).

Rain Newton-Smith, CBI Director of Economics, said:

“As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue. This supports our belief that the weaker-than-expected GDP growth in the early months of 2015 will be short-lived.

“A stellar increase in activity in the business and professional service sector and retail sales bounding ahead are clear indications of strong business and consumer confidence and increased spending power.

“UK exports are likely to be helped by renewed momentum in the Euro area but the stronger pound and weak demand in many overseas markets continue to pose challenges.”    

Notes to Editors:

*Feb 2006 according to the CBI’s quarterly Service Sector Survey - when the balance figure was +44%, which compares with +42% in this (May 2015) survey.   

The CBI composite survey indicator, first published in January 2014, brings together CBI surveys of economic activity into an aggregate index. The indicator includes survey results for output volumes as reported on a monthly basis for the manufacturing, distribution, consumer, business & professional services sectors. It offers an early perspective on the pace of economic growth and covers around 75% of the private sector economy.

The indicator results are reported in a similar way to other CBI surveys and use the ‘balance’ statistic - the difference between the percentage of respondents replying ‘up’ minus the percentage replying ‘down’. The ‘balance’ provides a simplified method of interpreting the results, and over a period of time, the trend in the balance gives a good indication of the trend in the economic indicator.

The CBI Growth Indicator for May 2015 is a composite of the following monthly economic data:

• Industrial Trends Survey
• Distributive Trades Survey
• Service Sector Survey.