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CBI reveals unexpected profit drop

PROFITABILITY fell unexpectedly in both the consumer and business and professional services sector in the last three months as business levels remained well below normal, according to the CBI.

The quarterly service sector survey found that consumer services, both in terms of value and volume of business, fell in the past three months, despite being expected to rise.

Meanwhile, 30% of companies said the value of business fell, and 21% said it rose, giving a rounded balance of -8%. And 25% of companies said volume fell and 20% said it rose, giving a balance of -5%. Both measures continued to be seen as well below normal by companies.

Looking to the next three months, firms expect a modest improvement in these measures, with balance figures of +8% for value of business and +9% for volume of business.

Prices continued to rise, for the third quarter in a row, with a balance of +19%, though the figure would have been lower under the previous classification, coverage and weighting, while costs also rose with a balance of +23%.

The overall profitability of business fell in consumer services, with a balance of -14%. Looking forward to the next three months, firms expect profitability to fall further, with a balance of -26%.

In business and professional services, value of business fell, with a balance of -13%, and volume was little changed (+2%) in line with expectations, though the measure of volume of business was lower than it would have been under the previous survey classification, coverage and weighting.

Ian McCafferty, CBI Chief Economic Adviser, said:“These survey results highlight that activity across the economy is patchy, with some sectors doing better than others. And such conditions are likely to continue into next year.”

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