Private sector turns less pessimistic but outlook still subdued, CBI says

(Sharecast News) - Businesses across the UK private sector are their least pessimistic in almost two years, according to the Confederation of British Industry's Growth Indicator report released on Tuesday, though the upcoming Autumn Budget is expected to contain any upside momentum. The CBI survey found that private sector firms were still downbeat, predicting another fall in activity over the coming three months, but the net balance - the proportion of firms predicting an increase minus those expecting a decrease - fell to -11% in August.

This was up from -18% in the July survey and the least negative since November 2024. Activity over the three months to August (-23%) declined at a similar rate as seen since late-2024.

Behind the improving outlook were business and professional services firms, which expect volumes to remain more or less steady (-3%), while manufacturers predict only a modest fall in output (-7%).

This was partially offset by increased pessimism among distribution (-21%) and consumer services firms (-31%).

Alpesh Paleja, the CBI's deputy chief economist, said the data was "encouraging" but responses "paint a picture of a tentative move towards stabilisation, rather than strong, sustained growth".

"Business' diagnosis of conditions remains the same: subdued demand and confidence, coupled with intense cost pressures hitting margins. If the Government wants to further strengthen growth expectations, it must use the Autumn Budget to cut the cost of doing business and restore competitiveness," he said.