Service Sector Firms Are High On Confidence, According To The CBI

Service sector companies are hiring more staff on the back of an upswing in growth, according to the Confederation of British Industry (CBI).

The body's latest quarterly service sector survey shows that in the three months to May, companies across the country were confident about their business situation, with optimism rising at the fastest rate since recording began in 1998.

It seems this optimism is contributing to improved employment levels, with decision-makers at the 151 companies questioned outlining their commitment to recruitment and training.

Katja Hall, CBI deputy director-general, said: "With a full year of growth under their belts, service sector firms are more upbeat than they have been for a long time.

"The recovery continues to strengthen with both consumer and business-facing firms taking on more staff and investing in training and IT. But a rising number of firms, particularly in business and professional services are having problems finding the right staff."

With the service sector of such importance to the UK economy, politicians in the governing coalition will hope that voter anger expressed in the recent local and European elections may be quelled by reducing rates of unemployment.

The UK's unemployment rate currently sits at 6.8 per cent, well down from its height of 8.4 per cent in January 2012.

However, despite the good news about the UK's service sector, some analysts have voiced concern that the UK is too reliant upon the industry and should instead be investing in its manufacturing and construction sectors to diversify growth.

While the manufacturing sector has performed well in recent months, construction companies remain reliant on government support for the Help to Buy scheme, which has caused a boom in house building, but has fuelled concerns over a housing bubble.

Earlier this month, prime minister David Cameron admitted he had some concerns about the surge in house prices seen in 2014.

Expert Opinion

It is excellent news to see more companies in the service sector taking on new employees and it all bodes well for the continued improvement being seen in the economy. <br/> <br/>“However, it is wise for all businesses – particularly small and medium-sized enterprises – to ensure they think carefully about the systems and processes they have in place to handle HR and employment-related issues. Specifically with smaller firms, they may not have the established tools in place to ensure that all aspects of their recruitment meet recognised guidelines. <br/> <br/>“We would urge any growing businesses with concerns regarding these issues to seek legal advice at the earliest opportunity to avoid any of the growing pains which come with taking on new staff.” <br/> Steven Beahan - Partner