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UK economy accelerating, CBI says UK economy accelerating, CBI says
(about 1 hour later)
UK economic growth has “cranked up several gears” to its fastest pace for a year, backing hopes that a slowdown in the first quarter of 2015 will be short-lived, figures suggest. UK economic growth has “cranked up several gears” to its fastest pace for a year, boosting hopes that a slowdown in the first quarter of 2015 will be short-lived, figures suggest.
The CBI’s latest growth indicator found that expansion in the three months to May reached its strongest rate since May last year.The CBI’s latest growth indicator found that expansion in the three months to May reached its strongest rate since May last year.
Figures derived from surveys of 811 businesses showed a reading of plus 33%, compared with plus 35% a year ago, and optimism was also strong, suggesting firms expect the strong pace to continue. Figures derived from surveys of 811 businesses showed a reading of plus 33%, compared with plus-35% a year ago, and optimism was also strong, suggesting firms expect the strong pace to continue.
The CBI said growth had quickened in all main sectors, with a modest uptick for manufacturing, strong growth for retail, and a “standout” performance for business and professional services - which includes accountancy, legal and marketing firms. The CBI said growth had quickened in all main sectors, with a modest uptick for manufacturing, strong growth for retail, and a “standout” performance for business and professional services – which includes accountancy, legal and marketing firms.
The latter sector recorded its fastest growth in business volumes since February 2006 and was the main driver of the overall acceleration, the survey found. The latter recorded its fastest growth in business volumes since February 2006 and was the main driver of the overall acceleration, the survey found.
Expectations are that this sector’s growth will slow though remain robust in the next three months, made up for by stronger growth in consumer services – including hotels, bars, restaurants, travel and leisure – as well as retail and manufacturing.Expectations are that this sector’s growth will slow though remain robust in the next three months, made up for by stronger growth in consumer services – including hotels, bars, restaurants, travel and leisure – as well as retail and manufacturing.
Rain Newton-Smith, the CBI’s director of economics, said:Rain Newton-Smith, the CBI’s director of economics, said:
As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue. This supports our belief that the weaker-than-expected GDP growth in the early months of 2015 will be short-lived.As we move through the second quarter, growth has cranked up several gears and businesses expect that faster pace to continue. This supports our belief that the weaker-than-expected GDP growth in the early months of 2015 will be short-lived.
A stellar increase in activity in the business and professional service sector and retail sales bounding ahead are clear indications of strong business and consumer confidence and increased spending power.A stellar increase in activity in the business and professional service sector and retail sales bounding ahead are clear indications of strong business and consumer confidence and increased spending power.
UK exports are likely to be helped by renewed momentum in the euro area but the stronger pound and weak demand in many overseas markets continue to pose challenges.UK exports are likely to be helped by renewed momentum in the euro area but the stronger pound and weak demand in many overseas markets continue to pose challenges.
The survey comes days after official figures confirmed that growth had slowed down to 0.3% in the first quarter of 2015 - the worst performance since the end of 2012 - scotching hopes that it would be revised upwards. The survey comes days after official figures confirmed that growth had slowed down to 0.3% in the first quarter of 2015 – the worst performance since the end of 2012 – scotching hopes that it would be revised upwards.