Demand in services sector weakens in past three months

Demand in the services sector weakened in the three months to November as consumer services saw business volumes fall at the fastest pace since February 2012, according to an industry survey.
Pictured Anna Leach from the CBIPictured Anna Leach from the CBI
Pictured Anna Leach from the CBI

The Confederation of British Industry’s (CBI) latest quarterly Service Sector Survey found that business and professional services firms – which include accountancy, legal and marketing firms – said business volumes were stable, but volumes are expected to fall slightly in the three months to February.

Meanwhile, following a disappointing performance in the quarter to November, consumer services companies, which include hotels, bars, restaurants, travel and leisure, expect volumes to edge up slightly in the three months to February.

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Cost pressures eased across the services sector in the three months to November, but remained strong compared with long-run averages

Consumer services firms raised their selling prices at the fastest pace since May 2008, but with volumes falling, profitability declined for the seventh straight quarter. Prices increased at a steady pace in business and professional services, with profitability remaining flat for the fourth consecutive quarter.

Anna Leach, CBI’s head of economic intelligence, said: “It’s no surprise that consumer services firms are having a tough time, as people feel the pinch in their pockets from higher inflation. While weaker demand appears to have hit employment in consumer services last quarter, firms are looking to resume hiring next quarter as demand stabilises.”