Growth in private sector activity ‘steady’ in first quarter
GROWTH IN private sector activity remained steady in the three months to April, according to the CBI’s latest Growth Indicator.
The business organisation’s indicator showed that activity was +19 per cent, up from +18 per cent in the quarter to March.
Activity within consumer services stabilised, after falling in the quarter to March, rising to +3 per cent in the quarter to April from -23 per cent.
Business and professional services activity and distribution sales continued to grow solidly in the quarter to April but growth in manufacturing output slowed somewhat.
Looking ahead, private sector activity is expected to grow at a similar pace in the next three months at +22 per cent.
Within this, consumer services expect a return to growth and business and professional services firms expect growth to pick up further. Manufacturers expect a similar pace of growth, while distribution firms anticipate growth to slow.
Alpesh Paleja, lead economist at the CBI, said: “While private sector growth seems resilient so far, near-term challenges are growing. Strong inflationary pressure is hurting businesses through higher costs, and is leading to an acute cost-of-living crunch for households. This will weigh on the economic outlook for this year.
“While the Chancellor announced support for low-income households in his Spring Statement, this should be kept under review in light of febrile pressures on living standards. To combat rising cost pressures, firms may also require further support prior to the Autumn Budget, not least energy intensive firms.”
Jane Madeley, chairwoman of the CBI in Yorkshire, last month told The Yorkshire Post that more support was needed to help businesses, especially small firms, deal with rising energy prices.
Firms have already been trying to “contain and manage” inflationary pressures for some time, Ms Madeley says.
“These further hikes in energy prices are going to be really difficult for businesses to absorb,” she added. Ms Madeley, who is also chief financial officer at the University of Leeds, said she would like to see the Government provide financial support similar to Covid loans for small businesses to help them manage cash flow.
“We would support the same thing from a business perspective rather than a blanket response,” she said.
“It needs to be targeted at those with the most need.”