Private activity fell sharply in the three months to July, but at a slower pace than June (-57% from -71%), according to the CBI’s monthly Growth Indicator.

The composite measure, based on 752 respondents (between 25 June and 15 July 2020), saw business and professional services activity (-50% in July from -77% in June) and distribution sales decline more slowly than last month (-47% from -57%). Manufacturing output (-59% from -57%) and consumer services activity (-88% from -89%) continued to fall at broadly similar rates.

Looking ahead, the pace of decline is expected to ease further over the next three months (-19%). Manufacturers expect output to grow (+15%), marking the first time that expectations have been positive since lockdown measures were introduced. Distribution (-16%), consumer services (-49%) and business & professional services (-23%) expect activity to fall at a slower rate.

Supplementary Covid-19 survey questions revealed: Only 6% of firms remain non-operational (down slightly from 9% in June), while 21% are partially operational (from 35%). Around two-thirds of firms (67%) are completely operational (i.e. with all sites open, or some operations/staff offsite); a 1m social distancing rule on average allows firms to operate at 85% capacity, compared to 72% under a 2m rule; and the proportion of firms citing low demand as an operational challenge remained high (68%) but eased slightly from June (74%).

Alpesh Paleja, CBI Lead Economist, said: “With businesses gradually reopening, this month’s data seems to indicate a turning point for the economy. Yet activity is still falling sharply, particularly for those in consumer-facing sectors.

“It is clear that many businesses remain in acute financial distress. The Chancellor’s Summer Statement was a good start in addressing the growing economic legacies of Covid-19, but there is more to do. More immediate direct support for firms, from grants to further business rates relief, is still urgently needed.”

Supplementary COVID-19 specific questions: perceived challenges related to workforce absences have subsided somewhat, with fewer firms concerned about absences from school closures (22% from 37%), transport difficulties (9% from 23%) and illness (9% from 15%); 37% of firms are conducting, or planning to conduct, conversations with landlords/managing agents to review office space requirements because of increased levels of remote working; and 26% of firms now see half or less of their office space as essential. 65% of firms see at least 20% of their office space as non-essential.