Services sector growth to continue well into 2015, says CBI
Robust growth in the services sector will continue into next year, says the Confederation of British Industry (CBI). In its latest CBI Service Sector Survey, services were seen growing steadily in the three months to November.
The Survey, involving 191 companies, showed that investment increased across the whole sector. Capital expenditure in the consumer sector on land and buildings reached its highest level in four years. Business and professional services expenditure on IT reached a 7-year high.
In the business and professional sector, which includes marketing, legal and accountancy businesses, hiring grew at its fastest pace since 2007.
During the last quarter there was also a significant increase in the number of workers in consumer services, which includes restaurants, bars, hotels, and travel & leisure companies.
Spending on staff training in the consumer sector increased to its highest level since 1999, as skills shortages started to bite. According to the CBI, skills training spending will remain strong.
The services sector will continue growing, says Ms. Newton-Smith.
Training costs in the business and professional services sector are forecast to increase.
Despite all this impressive growth, optimism about the business situation in the services sector fell at its fastest rate since 2013.
CBI Director for Economics, Rain Newton-Smith, said:
“Growth across the services sector is expected to continue into the New Year. And it’s good to see investment spending in IT at near record levels.”
“But skills shortages are starting to bite, putting more of a break on investment and future growth in consumer services. Therefore the spending rise in training in the sector is particularly encouraging.”
Survey’s key findings
Optimism: regarding the current business situation was it its lowest levels since February last year. In the latest quarter, thirty-two percent of companies felt more optimistic versus 6% who were less optimistic, leaving a net balance of +26%.
Business volumes: thirty-six percent of respondents reported higher volumes, versus 5% who said they had decreased, leaving a +30% net balance, which was slightly more than the +25% posted in the previous quarter. Expectations for the next quarter, at +32%, were the lowest since +26% registered in August 2013.
Hiring: thirty-nine percent of companies said the size of their workforce had increased during the last quarter, compared to 11% who said it went down, leaving a +28% net balance, compared to +5% in the previous quarter. There was a +25% net balance regarding hiring expectations for the coming quarter.
Training: spending grew at its fastest rate since May 1999, which registered a positive net balance of +41%. In the last quarter, 41% of respondents said they spent more on training compared to 2% who reported lower expenditure, leaving a +39% net balance.
Demand: with a net balance of +55%, in the last quarter, demand was at its lowest level since May 2007 (42%).
The Survey was carried out between October 24th and November 12th, 2013. A total of 71 Consumer Services firms and 120 Business & Professional Services businesses responded.