|Sunset at Tower Bridge Credit: Vic Thomasson, City of London|
Business activity in the UK service sector grew
to its highest level since 2007 and confidence rose strongly, according to the
CBI’s quarterly Service Sector Survey.
Business and professional services saw a
particularly sharp turnaround in business volumes, while activity in consumer
services picked up further.
The business and professional services sector,
which includes accountancy, legal, and marketing firms, saw business volumes
rise at their fastest pace since November 2007, in line with expectations. As a
result, profitability recorded its strongest growth since February 2008. Looking
ahead, optimism about future business reached a fifteen-year high – rising at
the fastest rate since the survey began in November 1998.
Consumer services, such as hotels, bars, restaurants and the travel and leisure
industries, saw business volumes rise at their fastest pace since August 2007,
also in line with expectations. Business confidence grew for the fourth
consecutive quarter. Profitability, however, fell unexpectedly, recording its
largest decline since February 2012 as price growth failed to materialise.
The survey of 161 companies revealed expectations for a strong quarter ahead,
with both sub-sectors expecting the fastest growth in value and volume of
business since 2007. However, while business and professional services firms
expect overall profitability to continue to grow and further strong growth in
headcount, consumer services firms expect another fall in both. Investment and
expansion plans for the year ahead have also diverged for the two sectors.
Business and professional firms’ have their strongest expansion plans since
February 2006, while consumer services firms are cautious across all areas of
Stephen Gifford, CBI director of economics, said: “We’ve seen a further
build-up of momentum in the service sector this quarter, with business and
professional services firms in particular seeing a turnaround in their fortunes.
“Confidence has risen strongly across the board, and the outlook is positive in
the short-term. But consumer services firms are a bit more worried about the
longer-term, and have scaled back their investment and expansion plans.
Conditions remain tricky as households grapple with the prolonged squeeze on
real incomes and business confidence remains vulnerable to any adverse
developments in the global economy. But, all being well, business should
continue to pick up through this year and into next.”
The Service Sector Survey was conducted between 26th
July and 14th August, with 97 business and professional services firms and 64
consumer services firms responding.
Check out our
, at a low annual charge of €25