GROWTH of the UK’s private sector economy accelerated in the three months to August but the export picture remains weak, the Confederation of British Industry’s latest growth indicator report has signalled.
The indicator, which takes in the manufacturing, retail and services sector, showed that growth of the UK private sector economy picked up to a pace just adrift of that recorded in the three months to May.
Growth in the three months to May was the strongest for a year, according to the indicator.
The growth indicator report is a composite of the CBI’s industrial trends, distributive trades, and service sector surveys.
The CBI cited particularly large contributions from the business and professional services and retail sectors to the improvement in growth in the three months to August.
However, it said: “A weaker outlook for global growth and stronger sterling means that net trade is expected to be a drag on the UK economy - something that is reflected in the relatively sluggish performance of the more export-orientated manufacturing sector.”
The CBI also noted downside risks to the UK economy arising from a slowdown in growth in China, and continuing uncertainty over the economic situation in Greece.
Rain Newton-Smith said: “While the overall domestic picture is looking bright, exporters still face a challenge, especially in light of a weaker outlook for global growth and the strength of sterling making them less competitive.
“Businesses will need to keep a close eye on turbulence in the markets, and whether it spills over into the real economy. The UK’s direct exposure to China is limited, but slower growth there and in other emerging markets has a knock-on impact on confidence around the globe, and could bear down on UK trade.”
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