Services sector continues to recover despite rising costs
Optimism improved for firms across the services sector in the three months to November, according to the latest Service Sector Survey from the Confederation of British Industry (CBI).
However, cost growth continued to pick up, increasing at the fastest pace since survey records began in 1998. Additionally, business volumes continued to grow at a strong pace across the services sector, although there are signs of slowing growth.
The CBI found that cost pressures are building, with both consumer services and business and professional services seeing costs rise at the fastest pace in survey history.
As a result, selling price growth accelerated too, with expectations for significantly faster growth in the coming quarter for both sub-sectors. Despite elevated cost pressures, profitability grew in business, professional and consumer services, with the strongest growth recorded since February 2018 for the latter.
Charlotte Dendy, Head of Economic Surveys and Data at the CBI, said:
‘With COVID still a concern with impacts for consumer confidence together with cost and supply chain issues continuing to bite, a difficult winter lies ahead.
‘It is therefore vital that the government works with business to help address these challenges, ease cost and supply pressures, giving businesses the platform to ensure the recovery does not fizzle out before Christmas.’