Amid signs that the manufacturing industry is taking an overdue turn for the better, a new divide in the British economy is emerging, this time between service activities.
Companies providing business and professional services are thriving, delivering record profitability and growing faster than at any time since November, 1998, according to the latest service sector survey by the CBI and Grant Thornton.
Against that, those providing services direct to personal consumers report the first decline in their volumes since November, 2003 and a squeeze on their profits.
Similarly, while providers of business and professional services are overwhelmingly optimistic - and more so than at any time last year - in consumer services an adverse balance of minus 19 per cent fears a further decline in the coming three months.
Steve Line, partner at Grant Thornton, Birmingham, said higher utility bills and petrol prices were eating into disposable income and making consumers think twice about the services they choose to buy.
He said: "Last year consumers were wary of spending on big ticket items. Today it is the definition of 'big' that is reducing and putting a strain on some medium-cost services within the personal care and leisure sectors in particular."
At the CBI, Ian McCafferty, chief economic adviser, commented: "Higher household bills are now making their impact well and truly felt on those companies offering leisure and entertainment services.
"Business services, on the other hand, are more resilient as well as benefiting from buoyant global activity." ..SUPL:
