Financials see the first signs of a recovery

THEWORST could be over for the recession-battered financial services industry, according to a new survey which shows business volumes growing over the last three months &ndash; the first quarterly increase in two years. <br /><br />The survey from employers&rsquo; organisation the CBI and Pricewater- houseCoopers says business volumes&nbsp; in the three months to the end of September rose for 32 per cent of firms, but fell for 24 per cent. <br /><br />The rounded balance of seven per cent is the first increase&nbsp; since a high of 23 per cent in September 2007.<br /><br />There has been strong growth for securities traders and investment managers, while banks and building societies expect to see growth over the next three months. <br /><br />Life insurers and insurance brokers do no expect growth in the next quarter, but are predicting a slower decline.<br /><br />Profitability is also up, boosted by a fall in running costs. Total operating costs fell this quarter for a balance of 17 per cent of firms, and are predicted to fall again next quarter.&nbsp; <br /><br />Staff costs as a proportion of total costs fell for the seventh quarter in a row, with a net 30 per cent of firms reporting a reduction in employees. <br /><br />Job losses are expected to continue throughout the next three months, albeit at a slower rate, which will mark a full two years of falling employment.<br /><br />Uncertainty about demand is reported as the greatest obstacle to investment by 69 per cent of businesses. This is the fourth survey in a row, and the highest proportion of businesses for seven years, to cite the factor as the biggest problem.<br /><br />The survey also records greater optimism throughout sector, with sentiment rising to the highest level since March 2004. A balance of 36 per cent of firms are more optimistic now about the general business situation than they were in June, which saw the first rise in two years.<br /><br />Ian McCafferty, CBI chief economic adviser, said: &ldquo;After nearly two years of exceptionally tough operating conditions, signs of a brighter outlook are appearing in the financial services sector.&rdquo;