Business activity in the service sector grew to its highest level since 2007 and confidence rose strongly, according to the CBI’s quarterly Service Sector Survey.
Optimism recorded in the survey has reached a 15 year high, the highest recorded since the survey began in 1998.
Key findings were:
- Optimism about business conditions rose significantly (+36%), at its fastest rate since the survey began in November 1998
- Business volumes grew (+20%) at the fastest rate since November 2007 (+26%), and are expected to grow further in the next three months (+26%)
- Profitability saw its sharpest rise (+9%) since February 2008 (+9%), and further growth is expected in the next three months (+15%)
- Numbers employed grew strongly (+22%), the fastest rate of growth since November 2007 (+33%). Further growth in headcount is expected in the next three months (+36%)
- Firms are expecting to expand their business (+39%) to the greatest extent since February 2006 (+42%)
- Planned spending on IT in the year ahead rose sharply on the previous quarter (+21% compared with +6%), but concerns that labour shortages will constrain capital expenditure have risen (cited as a constraint by 17% of respondents compared with 2% in the previous survey)
Stephen Gifford, CBI Director of Economics, said:
“We’ve seen a further build-up of momentum in the service sector this quarter, with business and professional services firms in particular seeing a turnaround in their fortunes.
Confidence has risen strongly across the board, and the outlook is positive in the short-term. But consumer services firms are a bit more worried about the longer-term, and have scaled back their investment and expansion plans.
Conditions remain tricky as households grapple with the prolonged squeeze on real incomes and business confidence remains vulnerable to any adverse developments in the global economy. But, all being well, business should continue to pick up through this year and into next.”
The Service Sector Survey was conducted between 26th July and 14th August, with 97 business and professional services firms and 64 consumer services firms responding.
Good news for Jersey, international financial services are an important component of the UK services sector and a key driver for business referral to Jersey. Expect to see positive second order effects for Jersey in the coming months.