Decline in private sector activity slows, with sharp rebound anticipated in the next three months
Latest CBI Growth Indicator also includes data on workplace testing
Private sector activity fell at the slowest pace in a year in the three months to March 2021 according to the latest CBI Growth Indicator.
The composite measure – based on 671 responses to CBI surveys between 24 February and 16 March – also revealed that expectations for growth over the next quarter are the most positive since 2018.
Business & professional services (-5% from -21%), consumer services (-38% from -76%) and distribution firms (-23% from -26%) all reported a slower pace of decline in activity. And manufacturers reported broadly flat output (+3% from -8%); the most positive balance for the sector since May 2019.
Looking ahead, expectations for growth over the next three months are the strongest since February 2018 (+24%), driven by predictions of above average growth in each main sector. For business and professional services (+32%) and manufacturers (+30%), these are the highest expectation for growth since June 2015 and August 2017 respectively.
While consumer services (+10%) and distribution firms (+11%) expect a slower pace of growth by comparison, these nonetheless are the strongest expectations for these sectors since January 2020 and February 2020 respectively.
Alpesh Paleja, CBI lead economist, said: “After a torrid year, our latest surveys show some light at the end of the tunnel – with the decline in activity across sectors slowing, and expectations of a rebound in growth over the next three months.
“Nonetheless many businesses are still struggling, especially the hardest hit including hospitality, retail, leisure and aviation. It’s likely that further targeted action will be required for aviation particularly, as the immediate outlook for the sector remains significantly challenging.
“More broadly, the UK and devolved governments ought to keep businesses close as the roadmap for reopening gets underway. Helping firms thrive once restrictions relax will be the best way of aiding the UK’s much-needed recovery.”
The CBI has been collecting data on workplace testing as part of its suite of economic surveys. Supplementary workplace testing questions in the latest CBI Growth Indicator revealed:
78% do not currently offer testing (down from 87% in January), citing the following factors:
- Workplace has been partially or completely closed (48%)
- Operational, logistical, and/or regulatory complexity of offering testing (23% down from 31%)
- Roll-out of the vaccine (28% up from 27% in January)
- Cost of testing (14% down from 25% in January)
- Low confidence in accuracy of lateral flow tests (16%)
Firms offering workplace testing (22%) were also asked how they were accessing testing:
- Central government asymptomatic testing programmes (27%)
- Local government asymptomatic testing programmes (35%)
- Private providers (23%)
- Other (16%)
Responding to the workplace testing data, John Foster, CBI director of policy and communications, said: “With the survey showing firms offering workplace testing are mostly using central and local government testing programmes, it’s absolutely vital businesses sign up for free testing before the deadline (April 12) if they’re to minimise costs as they prepare to reopen.
“Alongside the vaccine rollout, mass, rapid testing remains an essential pillar of the UK’s defences against the virus. As more of the economy emerges from lockdown, government and business will need to collaborate closer than ever to ensure companies have the clarity and guidance they need to successfully contribute to the recovery.”
