Business and professional services firms ‘report best ever quarter’

Companies are still looking to invest in people and capital according to the latest research from the CBI
Companies are still looking to invest in people and capital according to the latest research from the CBI

The best performance in 17 years from firms in areas such as accountancy, law and marketing helped Britain’s dominant services sector bounce back after a weak start to the year, CBI figures show.

Business and professional services companies reported their best ever period by value - according to CBI data going back to 1998 - in the three months to August.

Consumer services - including hotels, bars, restaurants, travel and leisure firms - had their best period by this measure since May 2014, according to the figures, while the sub-sector also saw its strongest jobs performance for more than a decade.

Overall, the services sector represents more than three-quarters of UK output and has led the economy out of recession.

The CBI said services firms reported healthy growth and optimism at its highest level since last year, in the three months to August.

Rain Newton-Smith, CBI director for economics, said: “After a weaker start to the year, the UK services sector is now seeing healthy growth across the board with firms becoming more profitable, driven by a surge in business volumes.

“Companies are still looking to invest in people and capital, especially in IT which will help them exploit new technology and boost productivity.

“But difficulties in finding staff with the right skills for firms to grow is a mounting concern, and with recent turbulence in the markets risk management skills are likely to be in demand.”

The survey of 176 firms showed that in business and professional services, 43 per cent said business volumes were up compared with three months ago and 10 per cent said they were down, giving a balance of 33 per cent, lower than in the three months to May.

Growth of business by value gave an unchanged reading of 37 per cent.

But a balance of firms reporting business values above normal was at a record 25 per cent.

Optimism was at its highest since May 2014, with a reading of 32 per cent.

A balance of 39 per cent said employee numbers had increased, the best since November, though firms expected this to slow.

In consumer services, a balance of 33 per cent saw volumes rising - the best reading since May 2014 - while value growth at 30 per cent was the strongest since February this year.

Optimism, with a reading of 37 per cent, was at its strongest since August 2014.

A balance of 49 per cent saw a rise in jobs - the best level since November 2002.

But expectations were for no employment growth in the coming three months.