Services firms start year ‘on firm footing’

Business volumes in the powerhouse services sector showed strong growth in the three months to February, CBI data shows.

Business and professional services firms, encompassing accountancy, law and marketing, saw business volumes grow at the fastest pace since August 2015, and growth is set to pick up further in the three months to May.

There was also a positive start to the year for the consumer services sector, which includes hotels, bars, restaurants, travel and leisure firms. Volumes hit the fastest pace in a year, and growth is expected to ease in the coming months but remain solid.

CBI chief economist Rain Newton-smith welcomed the services sector starting the year off “on a firm footing”, adding: “Despite feeling the pinch from high inflation, business volumes have bloomed, profits have grown for the first time in over two years and hiring is on the up.”

Overall services profitability grew for the first time since late 2015. Employment grew further in business and professional services and growth in headcount increased in the consumer services sector.

However, Newton-smith also sounded a note of caution, pointing out “telling signs” that underlying challenges for services firms are still evident.

“Investment plans are muted amid uncertainty, and plans for expansion among business and professional services firms have turned downwards,” she stated, adding that belonging to a comprehensive customs union would have a significant impact on allaying business’ concerns. 0 Newton-smith said there are still signs of challenges