Business confidence: private sector

Data on the outlook for the private sector from CBI business surveys.

Headline figures

Business confidence: manufacturing industry
Manufacturing optimism: -3% (July 2018) (CBI)
Next release date: October 2018.

Business confidence: services industry
Business and professional firms' optimism: +14% (May 2018) (CBI)
Consumer firms' optimism: -11% (May 2018) (CBI)
Next release date: August 2018.

Business confidence: financial services industry
Financial services firms' optimism: -4% (June 2018) (CBI/PricewaterhouseCoopers)
Next release date: September 2018.

Business confidence: manufacturing industry

Growth in manufacturing activity accelerated to its strongest pace in a year in the three months to July, according to the most recent quarterly Industrial Trends Survey from the CBI.

According to the survey, 35% of businesses reported an increase in new orders and 20% reported a decrease, giving a balance of +15%. Looking ahead, new orders are expected to grow slightly more slowly (+11%, from +15% in the three months to April), reflecting softer growth in domestic orders (+5%, down from +8% in the three months to April).

Employment growth has increased with 33% of organisations reporting a rise in the number of people employed and 16% saying employee numbers were down, giving a balance of +17%, broadly similar to the previous quarter (+21%).

Business optimism was largely unchanged from the previous quarter, as 18% of firms said they were more optimistic about the general business situation than three months ago and 21% were less optimistic, giving a balance of -3%. This compares with -4% recorded in the three months to April 2018.

The findings are based on a survey of 357 manufacturing firms conducted between 26 June and 12 July 2018.

Rain Newton-Smith, CBI chief economist, said: "The pick-up in output growth is good news and with new orders still running at a healthy rate, the near-term outlook for manufacturers remains reasonably bright."

"Yet manufacturers are still in wait-and-see mode when it comes to their investment plans. Skills shortages are increasing and making it hard for businesses to invest in capital projects, particularly with ongoing uncertainty around the direction of Brexit talks."

Source: CBI Quarterly Industrial Trends Survey, July 2018, on the CBI website.

Business confidence: services industry

Business volumes grew at the fastest rate since August 2015 among business and professional services companies, while volumes fell in the three months to May for consumer services, according to the CBI's latest quarterly survey of the services industry.

The survey analyses consumer services (such as hotels and restaurants) and business and professional services employers (such as accountancy, legal and marketing).

In the consumer services sector, the survey shows that optimism about the general business situation deteriorated in the three months to May (-11%). Overall, consumer services firms are more pessimistic about the outlook for business expansion in the year ahead (-10% from +14%). Growth in business volumes over the past three months fell to -12%, after growth in the previous quarter (+32%). However, growth in business volumes is expected to recover in the three months to August (+8%).

In the business and professional services sector, optimism about the business situation improved at the fastest pace in more than a year at +14%, compared with +14% in May 2017. Growth in the volume of business over the past three months accelerated to +25% compared with +14% in the previous quarter. Growth is expected to remain strong in the three months to August (+26%).

Average selling prices in business and professional services firms increased by +10%. Price growth is expected to pick up further in the three months to August (+14%). In the consumer services sector, average selling price growth accelerated (+26%) but it is expected that the pace of growth will slow down in the next quareter (+15%).

Rain Newton-Smith, CBI chief economist, said: "It's a tale of two sectors in services this quarter as business and professional services pick up a head of steam, but the fortunes of consumer services, like hotels and restaurants, continue to be squeezed."

"With inflation coming down and wage growth creeping up the worst of the squeeze on household incomes appears to be over. However, conditions for consumer-facing firms are likely to remain challenging for a while yet, not least in light of the high burden of business rates on our high streets."

The quarterly study, conducted between 27 April and 11 May 2018, was based on responses from 143 firms.

Source: CBI Service Sector Survey, May 2018, on the CBI website.

Business confidence: financial services industry

Business volumes in the financial services sector were flat in the three months to June 2018, according to the latest CBI/PricewaterhouseCoopers Financial Services Survey. Business optimism dipped slightly to -4%, compared with the -17% recorded in March.

Business volumes were down, with a balance of -4% over the three months to June this year; this compares with +22% recorded in the quarter to March. Going forward, the level of optimism in terms of business volumes increasing is down on the previous quarter; this is +7% compared with +20% in March.

Overall, 29% of financial services firms said that they had increased employment, while 5% said that employee numbers fell, giving a balance of +24% in the three months to June, compared with +9% in the three months to March. Employee numbers are expected to continue to grow in the next quarter (+15%).

Rain Newton-Smith, CBI chief economist, said: "Despite fairly subdued growth last quarter, it's good to see financial firms stepping up hiring and investment, with digital technologies and new services seen as the best way to grow in a fiercely competitive environment."

"The UK's financial services is the jewel in the crown of the British economy, and is an engine for growth in other parts of the economy across the country. Yet it's impossible to ignore the fact that three years have now passed since we've seen any significant improvement in overall sentiment in financial services."

The quarterly survey conducted between 15 May and 8 June 2018 received 100 responses.

Source: CBI/PricewaterhouseCoopers Financial Services Survey, June 2018, on the CBI website.

Note: unless otherwise stated, all figures are percentage balances, ie the difference between those replying "more", "up", "above normal" or "more than adequate" and those replying "less", "down", "below normal" or "less than adequate".