Partner Article

Service sector recession 'slowing'

The service sector is still in deep recession, but there are also some signs that sentiment is improving, the latest figures have revealed.

The quarterly CBI Service Sector Survey, conducted between 29 April and 13 May, covers 179 service-sector firms. They are divided into Business and Professional Services, such as accountancy, legal and marketing firms, and Consumer Services, including hotels, bars and restaurants, travel and leisure.

In Consumer Services, the volume of business fell over the past three months at the fastest rate since November 2001, but because prices rose, the fall in business values was less marked. In Business and Professional Services, values fell even faster than volumes due to record deflation in average selling prices.

However, in both sectors slower rates of decline in both values and volumes of business are expected in the next three months.

Employment continued to fall sharply, though the rate of decline is expected to ease over the coming months. The overall profitability of business also fell very sharply in both compared with three months ago, but at a slower rate than in the previous quarter when it declined at a record pace.

Ian McCafferty, CBI Chief Economic Adviser, said: “We have seen further falls in business activity over the past three months, but this survey suggests that the sharpest falls may now be over and that the situation is starting to stabilise.

“Firms are a lot less pessimistic than they were three months ago, and although the recession has deepened, business is not expected to decline at the same rate going forward as it has in the past six months. Although the situation is very tough for firms, some tentative grounds for cautious optimism are starting to appear in some areas.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .