CBI: Private sector activity experiencing a momentous downturn

Private sector activity fell at the sharpest pace since July 2009 in the three months to April (-25% from -4%), with expectations for a much deeper decline in the coming months according to the latest CBI monthly Growth Indicator.

The composite measure based on 860 respondents, starkly illustrates the impact that measures to tackle the COVID-19 pandemic are having on private sector activity. Business & professional services experienced the sharpest fall since 2009 (-28% from 0%), as did manufacturing (-21% from -8%).

Consumer services posted the biggest decline in business since November 2011 (-41% from -26%). Distribution sales volumes saw a slower decline than consumer services in the three months to April, though nonetheless at the sharpest pace in three months (-13% from +4%).

Looking ahead, activity is set to see deep declines over the next three months, with expectations at all-time lows in each survey. For manufacturing, this is now the worst expectation for growth since 1958, when the survey began (-61% from -20% in March). Similarly, for both business & professional services (-84% from +15%) and consumer services (-94% from -47%), these are the lowest expectations in the survey’s history (since 1998). For distribution (-74% from -5%) and the overall composite balance (-81% from -5%), these are also the weakest set of expectations since records began in 2003.

Additional questions asked in relation to COVID-19 revealed that (percentage of respondents, weighted):

65% of businesses reported that the outbreak had had a significantly negative impact on their domestic operations, with 43% in a state of complete shutdown in the UK.

29% of firms reported shipping delays and 26% reported shortages of goods or materials.

Around half (48%) of firms have temporarily laid off some staff, while 13% have done so on a permanent basis.

79% of businesses report cash flow difficulties and 33% experiencing constraints on the availability of external finance.

Alpesh Paleja, CBI Lead Economist, said:

“Our latest surveys confirm that no sector is being left untouched by the pandemic. Activity is expected to drop at unprecedented rates across the economy, so we are in for a rocky few months ahead.

“However, the social distancing measures put in place are vital for preserving public health, and the government’s swift action has saved many businesses and livelihoods so far. They should continue to remain agile as the situation evolves, ensuring that money gets to those who need it fast. The greater the number of companies helped to survive, the sooner the UK economy can restart and revive.”

For more information on the CBI, you can visit the website here 

Keep up to date with all the latest Essexnews and events here