Private sector activity plunges at record levels - CBI

UK private sector activity tumbled at a record pace in April, research published on Friday showed, as stringent measures introduced to tackle the Covid-19 pandemic took their toll.

The monthly composite CBI Growth Indicator was -25% in April, compared to -4% previously, the sharpest rate of decline since July 2009.

Within that, two sectors – business and professional services, and manufacturing – were hit the hardest. The former saw activity slump to -28% from 0%, while manufacturing was -21%, compared to -8%.

Consumer services posted the biggest decline in business since November 2011, falling to -41% from -26%.

The 860 respondents were similarly gloomy looking forward. The CBI said activity across the board was set to see “deep declines” over the next three months, with expectations at all-time lows across all surveys. In manufacturing, at -61%, it is the worst expectations for growth since the survey began in the 1950s.

The expectation index from business and professional services slumped to -84% from 15%, and to -94% from -47% for consumer services, the lowest expectations since 1998, when expectation data for the sectors first started being collected.

Alpesh Paleja, CBI lead economist, said: "Our latest surveys confirm that no sector is being left untouched by the pandemic. Activity is expected to drop at unprecedented rates across the economy, so we are in for a rocky few months ahead."

Paleja’s praised the government’s approach, however, arguing that policies such as the furlough scheme and business rates holidays had saved numerous businesses.

"They should continue to remain agile as the situation evolves, ensuring that money gets to those who need it fast," he added. "The greater the number of companies helped to survive, the sooner the UK economy can restart."

Specific Covid-19 questions added to the survey found that 43% of businesses questioned had shut down completely, while 79% reported cash flow difficulties. Around half – 45% – had temporarily laid off staff, and 13% had done so permanently.