The boom days of 2007 may seem a long time ago, but according to the latest monitor of the services sector, businesses could be getting back on track.
Over the last three months, activity in consumer-based businesses – which includes travel, food and drink - grew at its highest level since August 2007, a poll by the Confederation of British Industry (CBI) has found. The findings suggest consumers are spending more, rather than saving, a sign that confidence is picking up again.
Meanwhile business and professional services, which includes accountancy and legal and firms, saw workloads rise at their fastest pace since November 2007, fuelling the strongest profit growth since February 2008. Optimism within the sector grew at the fastest rate since the survey began in 1998.
However, it wasn’t all positive across the board. The quarterly survey of 161 companies found that profits for restaurants, hotels, and pubs fell despite better trading, as many firms absorb rising costs rather than passing them on to their customers.
The UK’s services sector accounts for more than three-quarters of overall economic growth. The optimistic outlook adds to a string of recent signs that suggest Britain's recovery is gathering pace. Last week, official figures showed that the economy grew by 0.7% in the second quarter, better than previously thought.
Stephen Gifford, CBI Director of Economics, said: ‘Conditions remain tricky as households grapple with the prolonged squeeze on real incomes and business confidence remains vulnerable to any adverse developments in the global economy. But, all being well, business should continue to pick up through this year and into next.’
Earlier this month, the CBI increased its UK economic growth forecast from 1% to 1.2% in 2013. The business lobby group also predicted the economy would grow 2.3% in 2014, up from the 2% previously predicted. It said increases in disposable income and a boost in business and housing investment had helped rebalance the economy.