“Sharp turnaround” for consumer services sector

Business activity in the UK service sector improved over the three months to May and optimism rose, according to latest research from the Confederation of British Industry (CBI).

Notably, consumer services experienced a “sharp turnaround” in business volumes: sectors such as hotels, bars, restaurants and travel and leisure saw business volumes rise at their fastest pace since August 2007 and overall, profitability rose for the first time since November 2007, despite employee costs continuing to increase.

However, the study also highlights concerns among firms over a shortage of internal finance and an inability to access external funding.

Stephen Gifford, CBI director of economics, comments: “What’s promising is that consumer services have seen growth in activity, and expect this to continue pointing to a greater willingness from people to go out and spend.

He adds: “But there is concern around getting access to finance, so it’s vital that growing firms look at the full range of funding options out there on the market.”

The survey also reveals that in the current quarter, business and professional services firms expect solid growth in both the value and volume of business.