The UK’s private sector firms are forecasting a modest uptick in activity over the next three months, according to the latest Growth Indicator from the Confederation of British Industry (CBI).

The survey reveals a cautiously optimistic outlook, with a weighted balance of +9% of businesses expecting activity to rise by November. This marks a continuation of the positive sentiment that has prevailed throughout the year, despite ongoing economic challenges.

The anticipated growth is expected to be driven primarily by the services sector, with a particularly strong performance in business and professional services (+19%) offsetting a slight decline in consumer services (-4%).

Manufacturing output is also expected to see a modest increase (+9%), although the pace of growth has softened compared to recent months. On the downside, distribution sales are forecasted to fall again (-4%), but the decline is expected to be much less severe than in previous months.

These expectations come on the heels of a decline in activity over the three months to August, where the CBI reported a drop of 8%, though this was an improvement from the steeper decline of 14% in the preceding quarter.

Despite the positive outlook for the coming months, activity across the private sector remains subdued, with many sectors experiencing either stagnation or decline over the past two years. The most recent contraction was broad-based, with a sharp fall in distribution sales and a milder decline in manufacturing output, while service sector volumes remained flat.

Alpesh Paleja, CBI’s deputy chief economist, said: "It’s encouraging that businesses’ expectations for growth remain positive, which suggests that the recent momentum in economic growth has been sustained into the second half of this year.

“But our surveys paint a very mixed picture across sectors – it’s notable that consumer-facing businesses are still struggling, and that momentum in manufacturing remains tepid at best."

Paleja also highlighted the need for government action as Parliament returns from its summer recess and the autumn Budget approaches. "Firms will want to see policies that can help turn a mixed outlook into a far more positive outcome for all sectors for the rest of the year. Whether that’s reducing costs – for instance, through long overdue business rates reform – or setting out a business tax roadmap to attract investment.”

As the UK navigates through economic uncertainty, the private sector’s cautious optimism signals hope for a gradual recovery, though significant challenges remain. Businesses are looking to the government for decisive action to ensure that the anticipated growth translates into tangible improvements across all sectors.