UK growth slows but expectatins buoyant, says CBI

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.

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.”