Source: Sharecast
The final three months of the calendar is one of the most important periods for many companies, particularly those in retail and hospitality. But according to the latest growth indicator from the Confederation of British Industry, private sector firms expect activity to fall in the three months to December, with a weighted balance of -14.
Declining volumes were seen in distribution, with a balance of -34; business and professional, at -10; and in consumer services, where the balance was -12. Overall, private sector activity fell in the three months to September, with a balance of -19, dragged down by falls in the services and distribution sectors, after manufacturing showed only a modest decline
Alpesh Paleja, deputy chief economist at CBI, said: "The outlook for growth remains subdued.
"The picture is mixed across sectors, with some signs of resilience and even mild improvement in parts of manufacturing and professional services. But these are far outweighed by challenges [facing] all business. Cost pressures remain strong, especially around energy and employment, and coupled with weak demand, this continues to put pressure on margins, recruitment and investment plans.
"Uncertainty ahead of next month's Budget is also holding back activity in some sectors.
"The chancellor must focus on easing the cumulative burden of costs as an entry point to spurring dynamism and activity."
New chancellor John Healey is due to present his first Budget at the end of October. Like his predecessor Rachel Reeves, he will need to balance soaring government debt and spending alongside rising costs for businesses and households, sluggish economic growth and weak sentiment.
The Bank of England earlier this month left interest rates on hold at 3.75%. But it warned that the cost of borrowing will likely increase if inflation - which now stands at 3.1% - cannot be reined in.
The CBI’s growth indicator is a composite measure of activity based on responses to the organisation’s retail, services and manufacturing surveys. In total, 699 firms responded between 27 August and 14 September.
A balance is the weighted percentage of companies reporting an increase minus those seeing a decrease.