Growth in the UK private sector has accelerated in the three months to December, the latest growth indicator report by the Confederation of Business Industries (CBI) has revealed on Thursday (22 December).
The report as seen by IBTimes UK, showed that the balance of firms reporting an increase in output stood at +17%. While this was down from December 2015's +20% reading, it was still the highest reading the sector has seen this year.
The report was based on a survey of 788 respondents. It showed that most sectors barring a few such as retail, saw an uptick in volumes. While retail sales slowed down, wholesaling and motor trades recorded slightly faster growth. Distribution growth on the other hand, continued to witness a strong pace of growth.
The highlight was, however, the manufacturing sector. The report said that growth in this sector was the highest since July 2014. Meanwhile, growth in business and professional, and consumer services also saw growth in the said three-month period.
The CBI said it expected a similar growth momentum over the next three months. The business organisation said that concerns over inflationary pressures continuing to grow remained. It said this was amid the weakness in the sterling.
Inflation was expected to grow higher over the next few years. At the end of 2017, this was expected to peak to about 2.4%, much higher than the Bank of England's 2% target. Such pressures would reduce real incomes of households, which in turn would have a negative impact on business growth, the report said.
Another concern for business growth going forward was an increase in business costs, the report pointed out. It said a weaker sterling continued to increase import costs, which had in turn increased the cost pressures for businesses.
While growth since the EU referendum had been stronger than expected, the overall growth in 2017 and 2018 would be slower. The report also forecast a growth of 1.3% in 2017 and 1.1% in 2018.
Commenting on the report, Alpesh Paleja, CBI's principal economist, said: "It's great to see the economy end the year on the up, with growth strengthening across the private sector. However, economic growth is likely to soften next year, as heightened uncertainty hits business investment and higher inflation weighs on household spending.
"With the fresh slate of a New Year on the horizon, British businesses will be looking to the Government for as much clarity as possible on upcoming EU negotiations, and want to work together to develop a post-Brexit economy that sustains growth and prosperity for all."