May 31, 2013 - Rachel Miller

UK service sector surges ahead

The UK services sector has seen a pronounced improvement in business activity over the three months to May, according to the CBI's quarterly Service Sector Survey. And optimism among service firms for the coming months is also high.

Consumer services in particular – such as hotels, bars, restaurants and the travel and leisure industries – saw business volumes rise at their fastest pace since August 2007. In addition, profitability saw its sharpest rise (+21%) since November 2007 (+27%) and is expected to grow further in the coming quarter (+34%).

Activity in the business and professional service sector, though, has stayed broadly flat over the quarter. However, this sector – which includes accountancy, legal and marketing firms – saw business optimism rise at its fastest rate (+29%) since February 2010, as expectations for the next quarter are brighter.

The CBI survey of 170 companies revealed that business and professional services firms are expecting solid growth in both the value and volume of business.

Consumer services firms also predict that growth in business will be sustained, and optimism about business conditions rose further on the previous quarter (+30% compared with +6%) – the third consecutive quarter of improvement.

Stephen Gifford, CBI director of economics, said: "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."