The quarterly research, conducted between 29 July and 12 August, covered 184 service-sector firms. They are divided into Business and Professional Services, such as accountancy, legal and marketing firms, and Consumer Services, including hotels, bars and restaurants, travel and leisure.
In Business and Professional Services, the value and volumes of business both rose very slightly on the previous quarter for the first time since May 2008, though both measures remain "below normal", for the seventh consecutive quarter. In Consumer Services, business values and volumes fell slightly, at much slower rates than in the previous three quarters.
Looking forward to the next three months, firms in Consumer Services expect business values to stabilise and volumes to decline marginally, and in Business and Professional Services, they are expected to rise, with more firms expecting rises than at any other point since November 2007.
However, the situation remains difficult for firms. Profitability fell in both sub-sectors as prices fell sharply. In Consumer Services, 32% of firms cut prices and just 11% raised them, giving a balance of -21%, the lowest since the survey began in 1998. The balance for Business and Professional Services was lower still at -31%. In both sub-sectors, firms expect prices to fall, but at slower rates, over the next three months.
Lai Wah Co, head of economic analysis at the CBI, said: "Business conditions remain difficult for service sector firms. They have had to cut the price of their services in order to compete for business, and this has pushed down their profitability further over the past three months.
"However, service sector activity has not been anywhere near as weak as in recent quarters and things are starting to look up, particularly for business and professional firms. These companies have seen an increase in business, albeit modest, for the first time in over a year and they are now feeling more optimistic.”
