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Booming confidence in UK service sector at highest point in 14 years

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In the three months to August, companies and professional services reported that levels of business volumes and values were significantly above normal – and a survey record high – reflecting the strongest growth in business volumes since 2001.

A total of 43 per cent of firms said business volumes were up compared with three months ago, and ten per cent said they were down. Optimism regarding the business situation rose further, with 40 per cent of bosses saying they were more optimistic than three months ago – compared with eight per cent saying they were less optimistic.

Consumer services also reported a brisk increase in business volumes, with 48 per cent of bosses saying they had risen. A total of 44 per cent of firms were more optimistic than three months ago, compared with seven per cent who were less optimistic.

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Firms in both sectors expect to raise investment spending over the next 12 months, with business and professional services firms in particular anticipating strong increases in IT investment, mainly to increase efficiency and exploit new technologies.

Businesses across the services sector reported strong growth in numbers employed, but recruitment is expected to be flat in consumer services over the coming quarter – and to slow somewhat in business and professional services. Both sectors cited availability of professional staff as limiting business expansion to the greatest extent since prior to the financial crisis in 2008.

Rain Newton-Smith, CBI director of economics, said: “After a weaker start to the year, the UK services sector is now seeing healthy growth across the board with firms becoming more profitable, driven by a surge in business volumes. Companies are still looking to invest in people and capital, especially in IT which will help them exploit new technology and boost productivity.

“But difficulties in finding staff with the right skills for firms to grow is a mounting concern, and with recent turbulence in the markets risk management skills are likely to be in demand.”

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