Growth in the UK’s private sector slowed slightly in the three months to June, according to the latest CBI Growth Indicator.

The composite measure, based on 677 respondents across the distribution, manufacturing and service sectors, showed the balance of firms reporting a rise in output at +6%, down from +10% in the three months to May.

The mild slowdown was driven by weaker activity in business and professional services which, after a spike in May, returned to the fairly subdued rates seen in March and April. Volumes also continued to fall in consumer services and remained unchanged in distribution. Meanwhile, manufacturing output growth picked up significantly to meet the healthier rates seen towards the end of 2017.

Looking ahead, private sector growth is expected to strengthen a little in the three months to August (+11%), buttressed by a pick-up in distribution and consumer services growth. Manufacturing growth is expected to ease but remain firm.

The CBI’s latest economic forecast highlighted that despite real pay growth inching into positive territory, living standards will continue to be dogged by weak productivity. As a result, any further pick up in real wages and consumer spending is likely to be modest. Meanwhile, manufacturers should continue to benefit from the lower level of sterling and solid global economic growth.

Rain Newton-Smith, CBI Chief Economist, said:

“While our latest survey shows pace the growth slowed slightly in June relative to late Spring, we still expect to see healthier GDP growth in Q2 overall compared with Q1.

Progress in lifting productivity growth at home is urgent if UK firms are to grasp opportunities overseas. Using proven technologies and sharing best practice are just two examples of how companies can borrow others’ ideas to promote growth.

“Meanwhile flexibility in the UK-EU negotiations will enable both sides to find solutions that protects goods and services trade across Europe, which matters for tens of millions of jobs.”

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