Although private sector activity continues to fall, it does so at a slower pace, indicating some stability and confidence returning to the sector.
According to the latest monthly ‘Growth Indicator’ from the CBI, private activity fell sharply in the three months to July, but at a slower pace than last month (-57% from -71%).
The composite measure, based on 752 respondents (between 25 June and 15 July 2020), saw business and professional services activity (-50% in July from -77% in June) and distribution sales decline at a slower pace than last month (-47% from -57%).
Manufacturing output (-59% from -57%) and consumer services activity (-88% from -89%) continued to fall at broadly similar rates.
Looking ahead, the pace of decline is expected to ease further over the next three months (-19%). Manufacturers expect output to grow (+15%), marking the first time that expectations have been positive since lockdown measures were introduced. Distribution (-16%), consumer services (-49%) and business & professional services (-23%) expect activity to fall at a slower rate.
“With businesses gradually reopening, this month’s data seems to indicate a turning point for the economy. Yet activity is still falling sharply, particularly for those in consumer-facing sectors,” said CBI Lead Economist, Alpesh Paleja.
“It’s clear that many businesses remain in acute financial distress. The Chancellor’s Summer Statement was a good start in addressing the growing economic legacies of COVID, but there’s more to do.
“More immediate direct support for firms, from grants to further business rates relief, is still urgently needed.”