UK companies expecting broad-based weakness over the summer - CBI

(Sharecast News) - UK companies continue to expect broad-based weakness over the summer, according to a survey released on Monday.

The Confederation of British Industry's latest growth indicator showed the balance of private sector companies expecting activity to fall in the three months to August was -24, little changed from -25 previously.

A balance is the weighted percentage of companies reporting an increase minus those reporting a decrease.

The CBI said companies' expectations were broadly unchanged from April, when the report was last published, and extend a period of negative predictions for growth that began in late 2024.

Business volumes in the services sector were expected to fall, with a balance of -28, with declines expected in consumer services volumes and business and professional services, for which balances were at -30 and -27, respectively. The CBI said expectations for professional services were at their weakest in a year.

Distribution sales were also expected to decline, with a balance of -23, while manufacturers expect a modest fall in volumes over the next three months with a balance of -13.

CBI deputy chief economist Alpesh Paleja said: "The hot weather may have arrived, but businesses are still feeling the chill as they head into summer. Activity continues to be buffeted by weak household spending and clients' reluctance to commit to big expenditure. Ongoing tensions in the Middle East are adding another layer of pressure, with firms increasingly alert to the risk of further cost increases and supply chain disruption.

"Our surveys already show a ramping up in cost pressures, particularly in manufacturing and consumer services. In most cases, firms are absorbing a significant share of these additional costs through already wafer-thin margins.

"Businesses want to grow, but many are being forced to focus on resilience rather than expansion. Firms need an easier and cheaper environment in which to operate. That means further measures to cut business energy costs, action to ease high labour costs, and a serious push to reduce the regulatory burden that is weighing on investment, employment and growth."

The growth indicator is a composite measure of activity based on responses to the CBI's long-running industrial trends, distributive trades and service sector surveys.