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: -4% (August 2018) (CBI)
Consumer firms' optimism: +7% (August 2018) (CBI)
Next release date: November 2018.

Business confidence: financial services industry
Financial services firms' optimism: +12% (September 2018) (CBI/PricewaterhouseCoopers)
Next release date: January 2019.

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 eased among business and professional services companies, while business volumes picked up slightly for 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 improved in the three months to August (+7%), compared with -11% in May. Overall, consumer services firms are more optimistic about the outlook for business expansion in the year ahead (+5%, up from -10% in May). Growth in business volumes over the past three months bounced back to +7%, after a decline in the previous quarter (-12%). Growth in business volumes is expected to be steady in the three months to November (+6%).

In the business and professional services sector, optimism about the general business situation fell at the fastest pace since November 2016 at -4%, compared with +14% in May. Growth in the volume of business over the past three months slowed to +14% compared with +25% in the previous quarter. Growth is expected to weaken further in the three months to November (+6%).

Average selling prices in business and professional services firms increased by +9%. Price growth is expected to be flat in the three months to November (+2%). In the consumer services sector, average selling price growth eased (+20%) from the previous quarter but it is expected that the pace of growth will pick up in the next quarter (+26%).

Rain Newton-Smith, CBI chief economist, said: "Although consumer services growth inched up last quarter, overall services sector growth was fairly muted. And with cost pressures rising, services firms are not seeing any improvement in their bottom lines."

"The underlying challenges facing the sector are not going away any time soon. Demand growth is expected to remain subdued next quarter and firms seem hesitant over the prospects for expanding their businesses in the year ahead. They still plan to take on new workers next quarter, but the confidence to invest significantly more is lacking."

The quarterly study, conducted between 27th July and 13th August 2018, was based on responses from 207 firms.

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

Business confidence: financial services industry

Business volumes in the financial services sector were +12% in the three months to September 2018, according to the latest CBI/PricewaterhouseCoopers Financial Services Survey. Business optimism fell sharply to -30%, compared with the -4% recorded in June.

Business volumes were up, with a balance of +12% over the three months to September this year; this compares with -4% recorded in the quarter to June. Going forward, the level of optimism in terms of business volumes increasing is down on the previous quarter; this is +1% compared with +7% in June.

Overall, 20% of financial services firms said that they had increased employment, while 17% said that employee numbers fell, giving a balance of +3% in the three months to September, compared with +24% in the three months to June. Employee numbers are expected to hold steady in the next quarter (0%).

Rain Newton-Smith, CBI chief economist, said: ""While it's good to see that demand for financial services is holding up, with business volumes edging higher last quarter, it's simply impossible to ignore the dangerous signs of strain on the sector arising from the combined challenges of a subdued economy, Brexit, regulation and rapid advances in technology."

"For the sector to continue to be one of the UK's most attractive economic assets, it is fundamental that a Withdrawal Agreement with the EU is agreed. This will provide temporary but essential relief for financial services firms of all sizes. Then attention can turn to the vital task of finalising our future economic relationship with the EU, in which services need to play a pivotal part."

The quarterly survey conducted between 15 August and 10 September 2018 received 100 responses.

Source: CBI/PricewaterhouseCoopers Financial Services Survey, October 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".