UK private sector growth was broadly steady in May, and further modest growth is expected in the months ahead, according to the latest CBI Growth Indicator.
But there are clear signs that uncertainty around the global outlook and the outcome of the EU referendum are concerning businesses.
The survey of 785 respondents across the manufacturing, distribution and service sectors showed the pace of growth in output was broadly similar to the previous month, with a balance of +11% of firms reporting a rise in May, compared with +10% in April.
Firms expect to see growth again over the next three months, with a balance of +13%, but expectations are well below the average seen over the previous three years (+26%).
UK manufacturers reported a rise in output and the services sector saw continued growth in business volumes, while retailers reported falling sales in the three months to May.
Rain Newton-Smith, CBI director of economics, said: "While underlying conditions for the UK economy are looking pretty stable, the risks are clear as day with uncertainty still brewing over the global outlook and the EU vote around the corner.
“Expectations for growth have slipped and are well below the levels of the last few years, with uncertainty swirling around the pace of output and the impact from risks on the horizon.
“Manufacturers and consumer services are faring better with a modest growth in output, but our retailers have seen a quieter time in the quarter to May.”