LONDON (MNI) – The UK’s service sector are having a mixed quarter
with business volumes among consumer services falling unexpectedly while
firms operating in business and professional services saw little change,
according to the CBI’s latest quarterly CBI Service Sector Survey.

In consumer services, the value and volume of business fell
unexpectedly during the quarter, the CBI said.

Of those surveyed, 30% said the value rose and 38% said it fell,
for a balance of -8%.

Looking at the volume of business, 23% reported a rise, and 41% a
drop, giving a balance of -18%. In the next three months, consumer
services firms expect business values (-8%) and volumes (-20%) to
contract further, the CBI said.

Average selling prices rose at a slower rate (+11%) than over the
previous quarter (+19%), while the growth in total costs per person
employed strengthened (+32%). Profitability stabilised during the
quarter (-3%), but is expected to dip slightly in the next three months
(-6%).

In business and professional services, the value and volume of
business were both flat during the November quarter at -3% and +3%
respectively. In the next quarter, values and volumes are expected to
fall marginally at a balance of -4% and -7% respectively, the CBI said.

Commenting on the survey, Ian McCafferty, CBI chief economic
adviser, said:

“The recovery of the service sector is proving bumpy in the face of
sluggish demand.”

“Consumers are cutting back on leisure activities and other
discretionary spending, which led to a surprise fall in business volumes
and flat profits this quarter,”

“Business and professional services firms are finding themselves
squeezed by a combination of falling prices, rising costs and flat
volumes, which is reducing profitability.”

“Uncertainty about demand remains a real concern across the sector,
and this is reflected in the fact that firms are feeling less optimistic
about the business situation than three months ago,”

The survey was conducted between 27 October and 10 November, and
covered 169 service sector firms.

–London Bureau; Tel: +442078627492; email: wwilkes@marketnews.com

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