Business confidence: private sector

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

Headline figures

Business confidence: manufacturing industry
Manufacturing optimism: -16% (October 2018) (CBI)
Next release date: January 2019.

Business confidence: services industry
Business and professional firms' optimism: -18% (November 2018) (CBI)
Consumer firms' optimism: -7% (November 2018) (CBI)
Next release date: February 2019.

Business confidence: financial services industry
Financial services firms' optimism: -24% (December 2018) (CBI/PricewaterhouseCoopers)
Next release date: April 2019.

Business confidence: manufacturing industry

Growth in manufacturing activity was stable in the three months to October but output growth is expected to stall in the three months to January 2019, according to the most recent quarterly Industrial Trends Survey from the CBI.

According to the survey, 21% of businesses reported an increase in new orders and 28% reported a decrease, giving a balance of -6%. Looking ahead, new orders are expected to fall slightly further (-4%, down from +11% in the three months to July), driven by domestic orders (-7%, down from +5% in the three months to July).

Employment growth has decreased with 26% of organisations reporting a rise in the number of people employed and 18% saying employee numbers were down, giving a balance of +7%, indicating a slowdown in growth from the previous quarter (+17%).

Business optimism fell significantly from the previous quarter, as 10% of firms said they were more optimistic about the general business situation than three months ago and 25% were less optimistic, giving a balance of -16%, the fastest decline since July 2016. This compares with -3% recorded in the three months to July 2018.

The findings are based on a survey of 354 manufacturing firms conducted between 26 September and 12 October 2018.

Rain Newton-Smith, CBI chief economist, said: "This is a sobering set of figures demanding immediate action at home and abroad."

"Planned investment is being scaled back in the face of deepening Brexit uncertainty, so it's vital that the Chancellor incentivises manufacturers to spend in areas that will help them become more productive. Using the upcoming Budget to increase the Annual Investment Allowance, alongside a wider review, could help the UK become more competitive with its global peers"

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

Business confidence: services industry

Growth in business volumes stalled among business and professional services companies, while business volumes fell steeply for consumer services firms in the three months to November, 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 November (-7%), compared with +7% in August. Overall, consumer services firms are less optimistic about the outlook for business expansion in the year ahead (-19%, down from +5% in August). Growth in business volumes over the past three months fell to -13%, after a modest increase in the previous quarter (+7%). A further fall in business volumes is expected in the three months to February (-7%).

In the business and professional services sector, optimism about the general business situation fell at the fastest pace since November 2016 at -18%, compared with -4% in August. Growth in the volume of business over the past three months stalled to -2% compared with +14% in the previous quarter. Growth is expected to weaken further in the three months to February (-5%).

Growth in average selling prices in business and professional services firms was broadly stable at +7%, down from +9% in August. Price growth is expected to pick up marginally in the three months to February (+13%). In the consumer services sector, average selling price growth eased (+6%) from the previous quarter (+20%) but it is expected that the pace of growth will pick up in the next quarter (+16%).

Rain Newton-Smith, CBI chief economist, said: "Brexit uncertainty continues to take its toll on the UK's services firms. Volumes and profitability are under pressure, and optimism about the business situation is falling across the sector."

"Services firms expect to be operating in a challenging environment over the next quarter and beyond, with demand set to weaken in the coming three months and firms seeing little prospect of expanding their businesses in the year ahead."

The quarterly study, conducted between 26 October and 14 November 2018, was based on responses from 178 firms.

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

Business confidence: financial services industry

Business volumes in the financial services sector were -7% in the three months to December 2018, according to the latest CBI/PricewaterhouseCoopers Financial Services Survey. Business optimism continued to fall in the quarter to December to -24%, compared with the -30% recorded in September.

Business volumes were down, with a balance of -7% over the three months to December; this compares with +12% recorded in the quarter to September. Going forward, the level of optimism in terms of business volumes increasing is down on the previous quarter; this is -9% compared with +1% in September.

Overall, 14% of financial services firms said that they had increased employment, while 9% said that employee numbers fell, giving a balance of +5% in the three months to December, compared with +3% in the three months to September. Employee numbers are expected to increase more rapidly in the next quarter (+21%).

Rain Newton-Smith, CBI chief economist, said: "A combination of macroeconomic and Brexit uncertainty, regulatory compliance and global market volatility are taking a toll on the UK's financial services sector. Financial services are a bellwether for the wider economy. The persistent weakness in optimism and the deterioration in expectations sound a warning for the outlook."

The quarterly survey conducted between 14 November and 14 December 2018 received 84 responses.

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