Business confidence: private sector

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

Headline figures

Business confidence: manufacturing industry
Manufacturing optimism: -32% (July 2019) (CBI)
Next release date: October 2019.

Business confidence: services industry
Business and professional firms' optimism: -31% (August 2019) (CBI)
Consumer firms' optimism: -28% (August 2019) (CBI)
Next release date: November 2019.

Business confidence: financial services industry
Financial services firms' optimism: -56% (September 2019) (CBI/PricewaterhouseCoopers)
Next release date: December 2019.

Business confidence: manufacturing industry

Growth in manufacturing output fell in the three months to July 2019 - the first drop in output since March 2016, according to the most recent quarterly Industrial Trends Survey from the CBI.

According to the survey, 24% of businesses reported an increase in new orders and 38% reported a decrease, giving a rounded balance of -15% (from +5% in the three months to April 2019). Looking ahead, new orders over the next three months are expected to pick up again (+10%), with domestic orders broadly flat (+3%) and export orders growing at an above average pace (+9%).

Employment has fallen, with 19% of organisations reporting an increase in the number of people employed and 27% saying employee numbers were down, giving a rounded balance of -8% from the previous quarter (+9%).

Business optimism fell at the fastest pace since July 2016, as 10% of firms said they were more optimistic about the general business situation than three months ago and 42% were less optimistic, giving a balance of -32%. This compares with -13% recorded in the three months to April 2019.

The findings are based on a survey of 291 manufacturing firms conducted between 25 June 2019 and 15 July 2019.

Rain Newton-Smith, CBI chief economist, said: "As the tailwind from stockpiling weakens, clouds are gathering above the manufacturing sector. It's being hit by the double-blow of Brexit uncertainty and slower global growth".

"With orders, employment, investment, output and business optimism all deteriorating among manufacturers, it's crucial for the new Prime Minister to secure a Brexit deal ahead of the October deadline."

Source: CBI Quarterly Industrial Trends Survey, July 2019, on the CBI website.

Business confidence: services industry

Business volumes stabilised among business and professional services companies, while business volumes continued to decline among consumer services firms in the three months to August, 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 continued to deteriorate in the three months to August (-28%), compared with the three months to May (-12%). Overall, consumer services firms remain negative about the outlook for business expansion in the year ahead, albeit less so than in previous quarters (-6%, compared with -31% in May). Growth in business volumes over the past three months continued to decline, falling to -8%, from -7% in May. Business volumes growth is expected to fall further in the three months to November (-19%) - the weakest expectations since February 2012.

In the business and professional services sector, optimism about the general business situation declined to -31%, compared with -8% in May. Growth in the volume of business over the past three months stabilised -2% compared with -19% in May. However, volumes are expected to fall sharply in the three months to November (-19%).

Growth in average selling prices in business and professional services firms grew marginally at +4% but are expected to be broadly flat in the three months to November (-3%). In the consumer services sector, average selling price growth was broadly steady (+12%) from the previous quarter (+9%) and is expected to remain so in the next quarter (+13%).

Rain Newton-Smith, CBI chief economist, said: "UK services firms are operating in a tough environment: activity is sluggish and profits are expected to fall in the coming months. It's little wonder that business sentiment has plummeted again."

"The outlook for services firms is bleak at the moment, with Brexit uncertainty holding back investment and expansion plans."

The quarterly study, conducted between 29 July and 12 August 2019, was based on responses from 106 business and professional firms and 39 consumer services firms.

Source: CBI Service Sector Survey, August 2019, on the CBI website.

Business confidence: financial services industry

Business volumes in the financial services sector were -16% in the three months to September 2019, according to the latest CBI/PricewaterhouseCoopers Financial Services Survey. Business optimism in the quarter to September continued to drop at a fast pace and stood at -56%, compared with -32% recorded in the three months to June 2019.

Business volumes were down, with a balance of -16% over the three months to September; this compares with -3% recorded in the quarter to June. Looking ahead, business volumes are expected to fall further, with the level of optimism in terms of business volumes decreasing at -27% compared with -24% in June.

Overall, 39% of financial services firms said that they had increased employment, while 16% said that employee numbers fell, giving a balance of +23% in the three months to September, compared with +13% in the three months to June. Employment growth is expected to slow in the next quarter (+6%).

Rain Newton-Smith, CBI chief economist, said: "Quarter after quarter after quarter, optimism continues to drop in the financial services sector. Add to that the dive in volumes and profits over the last three months, and it's clear something has to change."

"The sector is the jewel in the crown of the UK's world-leading services industry. While it's encouraging that investment plans have improved, the threat of a 'no deal' Brexit is hitting confidence."

The quarterly survey conducted between 14 August and 13 September 2019 received 83 responses.

Source: CBI/PricewaterhouseCoopers Financial Services Survey, September 2019, 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".