By Jonathan Davies
The UK economy is growing at its fastest rate for 12 months, according to the CBI.
The CBI’s latest Growth Indicator showed the pace of growth raced ahead in the three months to May, and the rate of growth is expected to continue.
It was modest in the manufacturing sector, and strong in the retail sector, but business & professional services was the stand-out performer. It recorded its fastest growth in business volumes since early 2006, and was the main driver of the overall acceleration in growth.
In the next three months, the swift pace of growth is expected to continue but the balance between sectors is likely to change. Responses from firms indicate the stellar growth in the business & professional service sector will slow but remain robust. That will be made up for by stronger growth in the consumer services, retail and manufacturing sectors.
The survey of of 811 businesses, brings together economic activity data from a range of business sectors. The reading of +33% for the three months to May was sharply up on the three months to April (+19%). And is the highest balance since May 2014 (+35%).
The balance of expectations for output growth over the next three months (June — August) is +30%. That is the strongest expectation since August last year (+38%).
Rain Newton-Smith, CBI Director of Economics, said: “As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue. This supports our belief that the weaker-than-expected GDP growth in the early months of 2015 will be short-lived.
“A stellar increase in activity in the business and professional service sector and retail sales bounding ahead are clear indications of strong business and consumer confidence and increased spending power.
“UK exports are likely to be helped by renewed momentum in the Euro area but the stronger pound and weak demand in many overseas markets continue to pose challenges.”