Service sector morale hit by consumer slump

 
Julian Harris
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CONSUMER service businesses such as bars and restaurants are suffering from sluggish demand, according to a survey released today.

Optimism plummeted 22 percentage points among consumer service executives, who have seen the value and volume of their businesses hit.

Employers’ organisation the CBI surveyed 169 service sector firms, covering both consumer services and professional services such as accountancy.

Thirty per cent of consumer-sector respondents said the value of their business had risen this quarter, yet 38 per cent reported a fall. And the same balance (-8 per cent) expect a decline in value of trade over the next three months.

The poor results were a surprise, after modest growth had been expected.

The outlook is a little rosier for professional services. While sentiment is still negative (at -4 per cent), it has recovered from its August low of -17 per cent.

Volume of business in professional services is narrowly up, increasing by a percentage point to three per cent.

Yet Ian McCafferty of the CBI said uncertainty over consumer demand is causing a fall in business optimism.

“Consumers are cutting back on leisure spending, leading to a surprise fall in business volumes and flat profits,” he said.