THE UK’s services industry has suffered a hugely disappointing performance in the last three months, with shrinking business and tumbling confidence, a survey of the country’s biggest sector shows today.
Both consumer services and professional services reported that business shrank in terms of volume and value, the Confederation of British Industry (CBI) research reveals.
Back in May, the same CBI survey showed that firms expected business to improve from June to August. A net balance of seven per cent of respondents in business services (such as legal and accountancy firms) predicted higher incomings, yet today’s survey reveals a devastating negative balance of 16 per cent reporting a fall in the value of business over the period.
Optimism among these firms has collapsed from a positive reading of plus eight per cent back in May to minus 11 per cent now.
And the story is even gloomier among consumer services firms such as restaurants and bars. Companies’ optimism regarding their business situation worsened from a negative balance of two per cent in May, to minus 23 per cent in August.
“Conditions in the service sector have not improved as expected this quarter, with firms now more negative about the overall business situation than they were three months ago,” said the CBI’s Anna Leach.
“Companies selling services to consumers continue to face challenging times, with price-cost pressures and a weak business environment squeezing profits.”
Last week the CBI also reported bad conditions in the manufacturing and retail sectors. Orders dipped at UK factories this month, the CBI found, while sales on the high street were slightly down.
The news will be worrying for chancellor George Osborne, who hopes the economy can bounce back in the third quarter of the year.
At the end of last week the UK’s GDP level for the second quarter of the year was revised to a fall of 0.5 per cent, up from the initial estimate of a 0.7 per cent drop.