Stabilising service sector offers hope for UK economy

Tuesday 29 May 2012

Business conditions in the UK service sector are showing signs of stabilising, it has been reported.

According to the Confederation of British Industry (CBI), companies across both service sub-sectors - consumer services and business & professional - expect business activity to pick up in the next three months.

The CBI said that confidence is also stabilising after the sharp falls of the last nine months.

In consumer services, the fall in business volume and value continued, however there was a further slackening in the pace of contraction.

A balance of -11 per cent of firms stated that volumes fell, which was a smaller fall than expected (-21 per cent), and the slowest pace of decline since February 2011.

In business & professional services, volumes declined moderately over the past three months (-15 per cent), but faster than expected (-6 per cent).

The decline in the value of business was less marked (-10 per cent) however and was considerably slower than in the previous three months (-31 per cent).

Ian McCafferty, CBI chief economic adviser, said that despite the continued uncertainty emanating from Europe, there are "some signs that conditions in the UK service sector are beginning to improve slightly".

“In consumer services firms, confidence is stabilising, and firms expect a somewhat better performance into the summer," he stated.

"Business and professional services firms saw similar rates of decline in business volumes this quarter as last, but are also predicting a return to growth next quarter for the first time in a year."

Posted by Dan Smith