Business optimism has deteriorated for the third consecutive quarter across the service sector as a whole, the decline was particularly sharp in business and professional services where sentiment fell at the fastest pace since May 2020, says the CBI.
Business volumes were mixed in the service sector with unchanged volumes in business & professional services while consumer services saw a further fall in volumes. With cost and price growth remaining well above average in both sub-sectors, profitability continued to drop in the three months to November
Next quarter, volumes and profitability are tipped to fall across the service sector with strong cost and price pressures expected to persist. That’s according to the latest CBI Service Sector Survey, based on responses from 297 service firms. The survey was conducted between 28 October and 16 November.
Charlotte Dendy, CBI Head of Economic Surveys said: “Strong cost and price pressures are continuing to hurt services firms, damaging optimism and investment intentions and hitting profitability.
“While firms welcomed aspects of the Autumn Statement, the sector is looking for longer-term measures from Government to spur business investment and bolster confidence into 2023 and beyond. In particular, firms want Government to focus on growth by fighting inflation and the recession together.
“Zero-cost growth levers like regulatory and planning reform, using existing flexibility in the immigration system, and providing greater tax clarity could all help ease the current handbrake on growth.”
