PROFESSIONAL services firms have bounced back to record significant growth for the first time in nearly three years, the Confederation for British Industry (CBI) is expected to announce today.
Business volumes for the last three months reached their highest index score – a positive balance of eight per cent – since May 2008.
Optimism in the business climate shot up to a positive balance for professional services firms, with 10 per cent more respondents optimistic than pessimistic, the CBI’s latest service sector survey will reveal.
The CBI’s previous two surveys (last November and August) reported negative balances (-4 per cent, and -17 per cent), with more professional service respondents pessimistic about their business situation.
Professional service companies include accountancy, legal and marketing firms.
However, the survey reported a dip in prospects for consumer services companies, such as hotels, bars and restaurants, travel and leisure.
In this sub-sector, the value and volume of business continued to fall, marking a full year of decline. A balance of -11 reported a fall in their volume of business in the three months leading up to the survey, which was conducted between 31 January and 16 February.
The period covers the severe winter freeze, which saw some shops and consumer services take a knock to their revenue.
The inclement weather struck half a per cent off the UK’s GDP, according to the Office for National Statistics.
The service sector as a whole accounts for around three quarters of British GDP.
However, negative feeling in the consumer services sector has lingered beyond the freezing weather, with optimism recording a negative score of -11 per cent, and a small balance (-1 per cent) of respondents expected business to fall over the coming three months.
“On the one hand, consumer spending is constrained, held back by rising prices and squeezed real incomes,” said the CBI’s chief economist Ian McCafferty.
“On the other, there are signs that spending by businesses is picking up, helping to re-balance the economy away from consumer-driven growth.”
A positive balance of 24 per cent of professional services firms expect to expand over the next year, compared to a negative balance (-17 per cent) in the consumer services sub-sector.