UK growth slows but expectatins buoyant, says CBI

THE rate of economic growth slowed in the three months to June, but activity remained solid across the quarter as a whole, according to the Confederation of British Industry.

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A CBI survey of 752 respondents across the manufacturing, retail and service sectors showed a reading of +14 per cent in the three months to June, compared with +33 per cent in May.

This slowdown was largely due to last month’s fast pace of growth in business and professional services not being sustained.

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Nonetheless, expectations are buoyant, with respondents anticipating that growth will bounce back in the next three months (a balance of +32 per cent).

UK manufacturing growth gained a bit of traction, but overall remained moderate, while retail sales volumes rose robustly in the year to June, albeit at a slower pace than previously, according to the lobby group.

A separate survey published yesterday showed that private-sector services grew more than expected last month, suggesting the economic recovery picked up going into the second half of the year.

The Markit/CIPS UK Services Purchasing Managers’ Index (PMI) rose by 2 points in June to 58.5, topping all forecasts and staying comfortably above the 50 mark that divides growth and contraction.

Markit warned that the recovery looks increasingly unbalanced after a PMI survey on Wednesday showed growth in manufacturing declined to its lowest in more than two years last month.

A note from Oxford Economics said: “The raft of data published over the past week painted the picture of an economy in good health.

“However, under the surface there was more evidence that the traditional ‘two-speed’ nature of the UK economy was reasserting itself, with services – particularly those closely related to the consumer – surging ahead and manufacturers, especially those reliant on exports, lagging.”