The service sector is cutting jobs at the fastest rate in more than a decade as the economic crisis intensifies, the CBI has revealed.
The latest quarterly CBI Service Sector Survey, published today (26 February), found companies had further plans to scale back jobs after a sharp fall in profit and business volumes was reported for the three months to February.
In consumer services, the numbers employed fell at a record rate (a balance of -22% – the balance being the difference between employers reporting a fall and those reporting a rise in employment levels, with zero representing a static market), having risen slightly in the preceding quarter for the first time in a year. More firms expected to see job losses over the next quarter (a balance of -44% – the worst figure since November 2001 when the balance fell to -59%).
Jobs were also lost at a record pace (-51% in the survey) in the business and professional services sector, with a similarly steep decline in employment expected in the coming three months (-45%).
Ian McCafferty, the CBI’s chief economic adviser, said: “Already deteriorating demand for business services such as advertising, legal advice and temporary office staff has slumped [further] in recent months. Jobs are already being lost at the fastest rate for more than 10 years across the service sector, and expectations suggest conditions will remain depressed for some time to come.”
The survey asked 196 service sector firms across business and professional services sector (such as accountancy, legal and marketing firms) and consumer services (including hotels, bars and restaurants, travel and leisure). As concerns grow over lack of demand, companies plan to cut back on investments in plant, machinery, real estate and IT, the CBI said.
McCafferty called on the government to ensure that its credit support package reaches viable firms with immediate needs.