5 March 2001, 12:42  Business confidence in the UK service sector

LONDON (MktNews) - Business confidence in the UK service sector rose in February versus November, particularly in consumer services, according to the latest quarterly service sector survey published Monday by the Confederation of British Industry and Deloitte and Touche. The optimism balance in consumer services rose to +11% in February, the highest level since September 1999, after -9% in November. Meanwhile, business and professional services recorded a balance of +12% versus -11% in November. "The recovery in optimism in both service sectors is based on business growth which is so far unaffected by the slowdown in the US economy," said Sudhir Junankar, the CBI's associate director of economic analysis. However, he noted there are marked differences between the two sectors. "Business and professional services firms are facing acute cost pressures and falling profitability as prices fall, but they plan substantial IT spending to boost efficiency. "Consumer service firms, by contrast, have been able to pass on some of the cost increases into prices but intend to scale down their IT investments over the coming year," Junankar said. Overall profitability grew strongly in consumer services over the past three months with a balance of +36%, but in business and professional services it fell substantially, to -17%.

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