UK firms report stronger growth, inflation test awaits
LONDON – Growth in Britain’s private sector picked up speed in the three months to February, according to a survey published on Friday by an employers group, contrasting with some recent signs of a slowdown in other gauges of the economy.
The Confederation of British Industry said its monthly measure of growth rose to +15 from +10 in the November-January period, suggesting there was still little impact on business so far from last year’s Brexit vote.
Companies expected similar growth over the next three months, the CBI said.
“The economy is growing solidly, with consumer-facing sectors leading the way for now,” CBI chief economist Rain Newton-Smith said.
“However, with inflation set to rise even further, this will dampen households’ spending power, and growth is likely to slow as the year progresses.”
The CBI surveyed 778 companies in the manufacturing, distribution and service sectors about output, sales and business volumes to compile its Growth Indicator.
Britain’s economy defied predictions of a quick and sharp hit after voters decided to leave the European Union at a referendum in June.
However, there have been some signs recently that consumers are spending less as rising inflation, pushed up by the post-Brexit vote fall in the value of the pound, eats into their spending power. Surveys have also shown that growth in the services and manufacturing came off recent highs at the start of the year.
Another gauge of Britain’s economy, the Markit/CIPS services PMI for February, is due at 0930 GMT. -Reuters