A New Report From The CBI Has Found Service Sector Companies Are Confident The Economy Will Grow

While some other areas of the economy remain sluggish in terms of growth prospects, the UK's service sector continues to go from strength to strength.

This is the finding of the Confederation of British Industry's (CBI's) quarterly Service Sector Survey, which asked leaders from over 150 companies to outline the current state of their order books, as well as employment levels.

In the three months to November, optimism in the entire industry increased at its strongest rate since records began in 1998 and business volumes rose at their quickest pace since November 2007, before the economic crisis began.

Consumer service companies, including those in travel, leisure and hospitality, saw order books mushroom far beyond what was expected and continue to grow at the fastest levels since 2007.

Stephen Gifford, CBI's director of economics, said: "Business activity is up, more people are being employed, and optimism is rising fast.

"These are encouraging signs that the recovery is taking hold across the services sector and that investment is picking up. Both consumer and business-facing services firms finally seem to be feeling the benefit of growing confidence and spending within the UK and globally."

But it isn't just companies that are benefiting from this growth and 50 per cent of employers stated the number of staff they are taking on is up from three months ago, with only ten per cent saying they are reducing their personnel levels.

Concerns around poor productivity in the UK economy, which saw massive drops in gross domestic product but only a relatively small fall in employment rates, will also be allayed as the CBI found profitability per staff member rose dramatically in the quarter.

However, while positive economic news continues to come in, small businesses still face issues, especially in relation to the banking sector's mishandling of finances and loans.

Expert Opinion

There has been a lot of positive news emerging from the manufacturing sector so it is encouraging to see that the service sector is performing well also. <br/> <br/>“A large proportion of the UK’s service related firms are SMEs and as they grow and take on more staff, their requirements will become increasingly complex and sophisticated. <br/> <br/>“Small and medium-sized businesses have the potential to be the big companies and employers of the future. Businesses must anticipate this and the issues they will face and proactively take good quality legal advice from people who understand the SME sector.” <br/> Steven Beahan - Partner