The British economy enjoyed a Summer Bloom according to new figures from the CBI.
The latest CBI Growth Indicator found that economic growth continued to pick up pace in the three months to August, with strong expectations for the run up to Christmas.
The survey of 754 companies across the manufacturing, retail and service sectors showed the pace of growth sped up for a second month running, with a balance of rising output volumes at +31 per cent in August. This was just below the 2015 high recorded in May of +33 per cent, itself the highest balance since May 2014 of +35 per cent.
The CBI said that the strength of growth was broad-based across the UK economy, with the business and professional services and retail sectors making particularly large contributions. Consumer services also did well.
However growth in manufacturing was more modest remaining broadly flat and putting a further knock on chancellor George Osbornes hopes of creating a more balanced economy less dependent on the service industry.
The CBI said though manufacturing was still expanding, exports were a “concern”. Manufacturing orders strengthened in August, reaching their highest level in four months, and export order books also improved. However firms are anticipating a fall in selling prices.
Expectations generally for the next three months are buoyant, the CBI said, with another firm expansion in business volumes anticipated. However this is due to come, the CBI added, at a “slightly cooler rate”.
The weather may have been a washout this month, but the sun has certainly been shining on the British economy. The pace of growth has been energised across the sectors, and it is good news that this is set to continue as we head into the autumn. While the overall domestic picture is looking bright, exporters still face a challenge, especially in light of a weaker outlook for global growth and the strength of Sterling making them less competitive,” said Rain Newton-Smith, CBI director of economics.
Businesses will need to keep a close eye on turbulence in the markets, and whether it spills over into the real economy. Slower growth in emerging markets has a knock-on impact on confidence around the globe, and could bear down on UK trade.
Indeed, the CBI said the main risks to the UK currently stem from the global economy. It said the recent turmoil in Chinas stock markets, which have led to plunging prices in the US and Europe, should have little direct impact on the UK.
However the impact on global growth from a further Chinese slowdown could “bear down on UK trade even more than we expect”.
The timing and pace of interest rate raise in the US also risks exacerbating currency and stockmarket volatility it warns.