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 – the first quarterly increase in two years.
The survey from employers’ organisation the CBI and Pricewater- houseCoopers says business volumes in the three months to the end of September rose for 32 per cent of firms, but fell for 24 per cent.
The rounded balance of seven per cent is the first increase since a high of 23 per cent in September 2007.
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.
Life insurers and insurance brokers do no expect growth in the next quarter, but are predicting a slower decline.
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.
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.
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.
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.
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.
Ian McCafferty, CBI chief economic adviser, said: “After nearly two years of exceptionally tough operating conditions, signs of a brighter outlook are appearing in the financial services sector.”