Services firms see mixed fortunes

 

Services companies turned in a weaker-than-expected performance in the third quarter but are more optimistic about the future, a survey by the Confederation of British Industry showed on Monday.

In its quarterly survey, the CBI said the majority of companies noted that business was currently below normal levels.

And while business services firms, like accountancy and law practices, had expected sales to pick up in the last quarter, they actually fell, leading companies to be cautious about their prospects for the coming three months.

They also expect profits to suffer as weak demand forces them to cut prices.

"This confirms the weakness reflected in the third-quarter GDP data and underlines the fragility of the economic recovery" said CBI chief economic adviser Ian McCafferty.

Britain remained in recession in the July-September period, marking its longest downturn on record, and lagging behind other major economies which have resumed growth.

However, the picture is brighter for consumer services firms, who expect sales to grow in the next three months and are their most optimistic about their business situation in almost three years, according to the CBI survey.

And companies said they expected to raise prices over the next few months and that their profits would improve.