Partner Article

Mixed bag across the service sector

A MIXED quarter was experienced by The UK’s service sector with business volumes among consumer services falling unexpectedly, and firms operating in business and professional services seeing little change.

According The CBI Service Sector Survey, 38% percent of business in the consumer services such as such as hotels, bars and restaurants, travel and leisure, reported a decline in business while only 30 % reported a rise despite expectations of a modest 8% growth in this sector.

Business & Professional Services, such as accountancy, legal and marketing firms found the value and volume of business were both flat during the November quarter at -3% and +3% respectively.

Ian McCafferty, CBI Chief Economic Adviser, said: “The recovery of the service sector is proving bumpy in the face of sluggish demand.

“Consumers are cutting back on leisure activities and other discretionary spending, which led to a surprise fall in business volumes and flat profits this quarter.”

Going into the next quarter outlook is bleak with consumer services firms expecting business values (-8%) and volumes (-20%) to contract further. While In Business & Professional services values and volumes are expected to fall marginally at a balance of -4% and -7% respectively.

Ian McCafferty, said: “Business and professional services firms are finding themselves squeezed by a combination of falling prices, rising costs and flat volumes, which is reducing profitability.

“Uncertainty about demand remains a real concern across the sector, and this is reflected in the fact that firms are feeling less optimistic about the business situation than three months ago.”

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