Business confidence: private sector

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

Headline figures

Business confidence: manufacturing industry
Manufacturing optimism: -23% (January 2019) (CBI)
Next release date: April 2019.

Business confidence: services industry
Business and professional firms' optimism: -34% (February 2019) (CBI)
Consumer firms' optimism: -28% (February 2019) (CBI)
Next release date: May 2019.

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

Business confidence: manufacturing industry

Manufacturing output grew at an above-average pace in the three months to January 2019, according to the most recent quarterly Industrial Trends Survey from the CBI.

According to the survey, 27% of businesses reported an increase in new orders and 24% reported a decrease, giving a rounded balance of +3% (from -6% in the three months to October 2018). Looking ahead, new orders over the next three months are expected to remain flat (-1%), with domestic orders falling slightly (-4%) and export orders growth expected to pick up further (+15%).

Employment growth has declined, with 21% of organisations reporting a rise in the number of people employed and 25% saying employee numbers were down, giving a balance of -4%, indicating a fall in growth from the previous quarter (+7%).

Business optimism saw its fastest decline since July 2016, as 11% of firms said they were more optimistic about the general business situation than three months ago and 34% were less optimistic, giving a balance of -23%. This compares with -16% recorded in the three months to October 2018.

The findings are based on a survey of 326 manufacturing firms conducted between 17 December 2018 and 11 January 2019.

Anna Leach, CBI head of economic intelligence, said: "The manufacturing sector is clearly feeling the pinch of Brexit uncertainty, with worsening business sentiment coinciding with an ongoing reluctance to invest in new facilities, machinery, innovation and training. Notwithstanding continued growth in output, these underwhelming figures in part reflect businesses' continuing desire for clarity."

"With uncertainty risking paralysis among manufacturers, it is vital for politicians to compromise and break the Brexit deadlock, paving the way for UK manufacturers to continue trading in global markets with minimal disruption."

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

Business confidence: services industry

Business volumes fell at the sharpest pace since April 2013 among business and professional services companies, while business volumes dropped for the fifth consecutive month among consumer services firms in the three months to February, 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 February (-28%), compared with -7% in November. Overall, consumer services firms are extremely negative about the outlook for business expansion in the year ahead (-44%, down from +19% in November). Growth in business volumes over the past three months fell to -5%, from -13% in November. Business volumes are expected to be unchanged in the three months to May (0%).

In the business and professional services sector, optimism about the general business situation fell at the fastest pace since November 2016 at -34%, compared with -18% in November. Growth in the volume of business over the past three months dropped to -12% compared with -2% in November. Volumes are expected to fall at a faster pace in the three months to May (-22%).

Growth in average selling prices in business and professional services firms eased slightly at +4%, down from +7% in November. Price growth is expected to pick up marginally in the three months to May (+10%). In the consumer services sector, average selling price growth picked up (+21%) from the previous quarter (+6%) and selling price inflation is expected to pick up further in the next quarter (+37%).

Rain Newton-Smith, CBI chief economist, said: "With just over one month until we leave the EU, the effect uncertainty is having upon the sector is unmistakably negative. Volumes and profits continue to fall across both services sub-sectors, while optimism has fallen at the quickest pace since 2009."

"Dimmed expectations for the year ahead mean it's more important than ever for the UK to avoid a no-deal scenario, which would create a perfect storm of issues for our world-leading services firms."

The quarterly study, conducted between 29 January and 14 February 2019, was based on responses from 128 business and professional firms and 56 consumer services firms.

Source: CBI Service Sector Survey, February 2019, 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".