CBI Economics

Trump’s Middle East gamble: macro impacts | CBI We examine the initial economic impact of the conflict in the Middle East.

We’ve examined the initial economic impact of the conflict in the Middle East, assessing key macro risks, market reactions and the implications for British businesses.

How could this affect UK inflation, growth and interest rates? Read our latest note 👇

www.cbi.org.uk/articles/tru...

The UK labour market isn’t working and squeezing business... A healthy business environment and a healthy labour market are two sides of the same coin

Ahead of the Spring Forecast, with unemployment rising at a post-pandemic high and profitability under pressure, CBI Chief Economist Louise Hellem calls for government to move away from a “business versus employees” mindset in @observeruk.bsky.social article:

observer.co.uk/news/busines...

Private sector remains under pressure - CBI Growth Indicator | CBI Private sector remains under pressure - CBI Growth Indicator

🔗 To learn more, click here: www.cbi.org.uk/media-centre...

📊The sector picture is more mixed

• Business & professional services: +4%
• Consumer services: -35%
• Distribution: -36%
• Manufacturing: -12%

[Figures shown are net balances – the percentage of firms expecting an increase in output/activity, minus those expecting a decrease]

📉 PRIVATE SECTOR ACTIVITY EXPECTED TO FALL IN THE THREE MONTHS TO MAY, THOUGH THE OUTLOOK HAS IMPROVED

The CBI’s latest surveys report that firms anticipate another decline in activity, but expectations are the least negative since November 2024.

Here are the key UK economic data releases and events for this week

Profitability across the service sector declines further as cost pressures continue to build - CBI Service Sector Survey | CBI Profitability across the service sector declines further as cost pressures continue to build - CBI Service Sector Survey

For more detail on the latest Service Sector Survey, check out our press release 👇
www.cbi.org.uk/media-centre/articles/service-sector-profitability-falls-again-as-rising-costs-squeeze-firms/

Employment continued to contract across the service sector in February. This was the fifteenth consecutive month of falling or flat headcounts amongst business & professional services firms and the twenty-first consecutive month of declines amongst consumer services firms.

Stubborn cost pressures and modest price inflation led profitability to fall further across the service sector at the joint fastest pace since May 2023 amongst consumer services firms, but at the slowest pace since August 2024 amongst business & professional services firms.

Total costs per person employed continued to rise amongst both business & professional services and consumer services firms. Although cost growth slowed in the three months to February, it remained above the long run average and is set to pick up again next quarter.

Business volumes continued declining in both sub-sectors in the quarter to February, albeit at a slower pace than last quarter. While next quarter, business & professional services firms expect volumes to grow, ending fifteen consecutive months of negative expectations.

General optimism continued to deteriorate sharply amongst consumer services firms in the three months to February, while optimism amongst business & professional services firms was broadly unchanged over the same period - the strongest sentiment since August 2024.

Retailers reported a sharp drop in annual sales in February, according to the latest DTS, with some mentioning that wet weather conditions weighed on footfall. Sentiment remains gloomy, hitting investment plans and jobs.

Key takeaways from the survey 🧵👇

Wet weather dampens retail sales in February – CBI Distributive Trades Survey | CBI Wet weather dampens retail sales in February – CBI Distributive Trades Survey

For a more detailed look at the latest Distributive Trades Survey and @martinsartorius.bsky.social's view of the results, check out our press release 👇

Total distribution sales volumes fell in the year to February at a faster rate compared to January. Sales are set to decline at a moderately slower pace next month.

Retail selling prices grew at a pace in line with the long-run average in the year to February. Retailers anticipate selling price inflation to remain broadly unchanged next month.

Retailers expect to reduce capital expenditure over the next 12 months (compared to the previous 12) to a slightly greater degree than in November. Investment intentions have been negative since mid-2022.

Persistently weak demand continues to weigh on sentiment, with retailers expecting their business situation to deteriorate over the coming quarter to one of the greatest degrees in 17 years.

Employment in retail fell in the year to February at the fastest pace since May 2023, and the pace of decline is expected to quicken slightly next month.

#Retail sales volumes fell at a rapid pace in the year to February, extending a run of weakness that dates back to mid-2023. Sales are expected to contract again next month, albeit at a slower rate, according to the CBI’s latest quarterly Distributive Trades Survey.

Here are the key UK economic data releases for this week

January’s sales growth was supported by increases across three of the four main categories. Non-store retailing led growth, largely driven by sales in artwork & antiques and online jewellery, according to the ONS.

#Retail sales volumes surged at the start of the year, growing by 1.8% m/m in January (from 0.4% in December). Underlying momentum improved as well, with sales volumes rising by 0.1% over the three months to January.

Manufacturing output decline slows in quarter to February – CBI Industrial Trends Survey  | CBI Manufacturing output decline slows in quarter to February – CBI Industrial Trends Survey

CBI Senior Economist @thecmartin.bsky.social said “Tackling punitive energy costs will strengthen competitiveness, ease cost of living pressures, and help boost demand across the economy”

To learn more, read our press release here: www.cbi.org.uk/media-centre...

Stocks of finished goods were reported as “more than adequate” in February, with the balance being broadly in line with the long-run average.

Total order books and export order books were reported as below “normal” in February. Both balances remain below their long-run averages.

Expectations for average selling price inflation were elevated in February, standing well above the long-run average.

The latest CBI Industrial Trends Survey showed that the decline in manufacturing output volumes slowed in the three months to February. Firms expect output to decline at a broadly similar pace in the three months to May.

UK #inflation slowed to 3.0% in January, in line with our latest projection. We expect this disinflationary momentum will gain pace in the coming months, reflecting the fading impact of last year’s energy and utility price increases

CBI responds to latest inflation data for January 2026 | CBI CBI responds to latest inflation data for January 2026

“We expect this downward momentum to continue in the coming months, reflecting the fading impact of last year’s energy and utility price increases."

Check out @martinsartorius.bsky.social's response to today's inflation data and what it could mean for interest rates: