Gloom hits the service sector, claims CBI

Optimism in both business and professional services - covering accountancy, legal and marketing firms - and consumer services - including hotels, bars and restaurants and travel and leisure firms - was at its lowest since February 2013.

The services sector represents more than three-quarters of UK output and has led the economy out of the downturn while the likes of manufacturing and construction continue to struggle.

Figures showed that for the three months to November, business and professional services firms reported that volumes of growth, though firm, was below expectations, and that this was expected to continue for the coming quarter.

However, employment in this sub-sector grew at its fastest pace for seven years.

In consumer services, business volumes ticked up while employment growth also advanced strongly.

The report added that spending on staff training in the consumer sector rose to its highest level for 15 years, possibly due to skills shortages.

Investment intentions in IT from business and professional services rose to their highest since 2007.

Rain Newton-Smith, of the CBI, said: “Growth across the services sector is expected to continue into the New Year.

“And it’s good to see investment spending in IT at near record levels. But skills shortages are starting to bite, putting more of a break on investment and future growth in consumer services.”

Economists say the slump reflects a weakened eurozone, a slowdown in emerging markets and geopolitical tensions.