The CBI business group was expected to give a fresh warning of a drawn-out recovery today after its latest survey gave a mixed picture from UK services firms.
Its latest survey found business volumes stabilising across the sector as a whole over the past three months - but consumer-facing firms such as hotels, bars and restaurants are outperforming still-struggling business and professional services companies.
The CBI’s chief economic adviser Ian McCafferty said: “Overall, these figures are consistent with our view that the economy is recovering slowly, but that we will have to wait a while before growth picks up.”
The fortunes of the UK’s powerhouse services sector will be critical in underpinning a recovery because it accounts for 75% of the country’s overall output.
Official figures on Friday gave some cheer for the sector, as output from services firms for the final three months of 2009 was revised up from 0.1% to 0.5%.
The CBI’s survey found business volumes among consumer services firms at its highest since the beginning of the credit crunch in August 2007, with a 7% balance of companies reporting an increase.
But results from business and professional services companies painted a far more sluggish picture, with more respondents reporting falling volumes than rising.
Firms are more optimistic about prospects than they were three months ago, but profits in both sub-sectors have been squeezed by rising costs and companies are also shedding jobs, the CBI added.
Mr McCafferty said: “Service sector firms are still concerned about the strength of demand over the year ahead as a constraint on business expansion, and their ability to raise funds also remains a key barrier to growth.”