Private sector growth picked up pace in the three months to July, according to the CBI’s (www.cbi.org.uk) latest Growth Indicator.

Based on a survey of 687 respondents across the manufacturing, distribution and service sectors, it showed that growth rose to a balance of +16% in the three months to July; this was from a balance of +6% and broadly in line with the average seen since the turn of the year.

The upturn was largely driven by consumer-facing sectors, with volumes rebounding in consumer services and momentum picking up in retail.

Manufacturing output also continued to increase, although volumes in business and professional services remained flat. Firms expect the pace of growth to hold broadly steady, in line with previous months this year.

Rain Newton-Smith, the CBI’s chief economist, said: “It’s good to see momentum in the economy firm up a little. However, much of the pick-up in consumer-facing sectors was likely down to the warm weather; underlying conditions are probably softer, as rising inflation eats into real earnings.

“Looking ahead, we expect softer growth, as the squeeze on household budgets continues and uncertainty weighs on business investment. That said, we should also see more of a boost from net trade, with strong export orders and output in manufacturing.

“If the economy is to thrive in the long term, it is vital that the Government and business continue to invest in a modern Industrial Strategy — and work together to seriously enhance productivity.”