Private sector growth improved in first quarter of year, reports CBI

Growth among private sector firms picked up in the three months to April, according to a report.

The latest CBI Growth Indicator said a balance of plus 10% of firms reported a rise in output in the quarter to April, compared with plus 2% in March.

It said expansion was driven by steady manufacturing output, together with a rebound in consumer services.

Business and professional services also saw growth edge higher, but retailers reported an unexpected dip in sales volumes over the period, the survey added.

Firms also remained optimistic over the coming quarter with a balance of plus 15% of firms expecting expansion to continue, down from plus 19% a month ago, but above the long-term average of plus 10%.

A few days ago the Office for National Statistics (ONS) said gross domestic product grew by 0.4% in the first three months of 2016 due to a slump in manufacturing and construction industries, down from 0.6% in the fourth quarter of last year.

But Rain Newton-Smith, CBI director of economics, said: "There are signs that the economy is picking up as we put the tough start to the year behind us.

"Manufacturing is stabilising, the services sector is performing well, and it's good to see solid expectations for further growth.

"We expect to see a bit more wind in the sails of the economy in the coming months, as low oil prices and a healthy labour market continue to support incomes and spending.

"The recent fall in the pound has already taken some of the pressure of manufacturers, and should spur export growth.

However, Ms Newton-Smith added the UK economy remained at risk from volatile global financial markets, a slowdown in the Chinese economy and uncertainty ahead of the EU referendum on June 23.