Service sector going downhill at fastest pace since 2008
Optimism across the service sector fell sharply in the past three months as business volumes and profitability continue to fall, a services sector survey from the CBI has revealed.
According to the survey, sentiment declined among both business and professional services and consumer services firms.
Optimism on the current business situation fell 34% this quarter, the fastest pace since financial crisis in 2008.
Business volumes in the business and professional services also fell 12%, down from -2% in November, and are set to decline at a faster pace over the quarter ahead (-22%).
Sentiment in the consumer services sector – which includes hotels, bars, restaurants, travel and leisure firms – also deteriorated 28%, the fastest pace since August 2016.
Business volumes in the consumer services sector fell narrowly for the fifth month running (-5% from -15% in November), with volumes expected to be flat in the three months to May.
Uncertainty about demand is the key factor holding back investment across the service sector, to the greatest degree since May 2013 said the CBI.
Employment in the sector is also being affected as this quarter it reported the weakest growth since February 2011.
Rain Newton-Smith, CBI chief economist, said: “With just over one month until we leave the EU, the effect uncertainty is having upon the sector is unmistakably negative. Volumes and profits continue to fall across both services sub-sectors, while optimism has fallen at the quickest pace since 2009.
“Dimmed expectations for the year ahead mean it’s more important than ever for the UK to avoid a no-deal scenario, which would create a perfect storm of issues for our world-leading services firms."