Contrasting fortunes within Britain’s service industries – CBI

Business volumes grew at the fastest rate since August 2015 among business and professional services firms in the UK, while volumes fell in the three months to May for consumer services, the CBI said today.

Business and professional services companies, which include the likes of accountan- cy, legal and marketing practices, expect to see volumes grow at a similarly robust pace over the next quarter. At the same time, firms’ optimism about the business situation has improved at its fastest pace for a year.

In contrast, following solid growth in the previous quarter, volumes fell in the three months to May within the consumer services sector, which includes hotels, bars, restaurants, travel and leisure firms. Optimism deteriorated over the last quarter, but consumer services businesses expect volumes growth to return next quarter.

Cost growth picked up again in the consumer services sector, matching the strong rates seen in Q2 and Q3 of 2017, while cost growth in business and professional servic- es edged higher. Stronger cost pressures fed through into higher price inflation in both sub-sectors.

Rain Newton-smith, CBI chief economist, said: “It’s a tale of two sectors in services this quarter as business and professional services pick up a head of steam, but the fortunes of consumer services, like hotels and restaurants, continue to be squeezed.” 0 Rain Newton-smith: ‘A tale of two sectors in services’