Service sector slows but growth remains strong - CBI

Rain Newton-Smith, director of economics, CBI
Rain Newton-Smith, director of economics, CBI
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Growth in the professional services slowed last month to the lowest since 2013, according to the latest CBI figures.

The trade body’s Service Sector Survey showed work volumes and values in consumer services, including hotels, bars, restaurants, travel and leisure, saw steady and strong growth in the three months to November.

However, expansion in professional services, including accountancy, legal and marketing firms, fell to its lowest in two years, causing last quarter’s overall growth to fall below the previous three months’ figures.

The survey of 173 firms showed that profit growth slowed in both sub-sectors, but that underlying conditions were more mixed.

While cost pressures eased in business and professional services, costs per person rose at the fastest pace in eight year in consumer services, partly reflecting the continuing strong expansion of headcount and training expenditure.

Optimism about the business situation has improved over the last three months, and business volumes and profitability are expected to continue expanding at an above-average pace during the three months to February, the CBI said.

CBI director of economics Rain Newton-Smith said: “Employment growth is expected to slow a little in the quarter ahead, and given concerns over a lack of skilled workers – remaining close to a seven year high in business and professional services – companies are increasingly looking to invest in new technologies that could raise their productivity.”