The
slowdown in the service sector has deepened as the events of 11 September begin
to hit home.
A
quarterly survey by the CBI and Deloitte & Touche shows that output fell
over the past three months, with balances of minus 59 per cent for consumer
services and minus 14 per cent for business and professional services.
This
compares to minus 20 per cent and plus 3 per cent respectively in the last
survey. Business confidence fell for the third successive survey. The November
response shows the impact of the events of 11 September, particularly on
consumer services.
Optimism
has dropped to minus 77 per cent for consumer services and minus 50 per cent
for business and professional services.
Profitability
continued on a downward path in consumer and business and professional services
and is expected to continue to fall in the coming three months.
Prices
dropped across the service sector, reflecting weakening demand. In consumer
services prices fell at the fastest rate since the survey began in 1998,
despite expectations of a rise.
Business
and professional services prices fell, in line with expectations. Further
declines are expected across the whole sector in the coming quarter.
The
number of people employed in consumer services continued to increase, but the
trend is expected to reverse in the coming months.
Employment
in business and professional services fell for the first time on record and it
is anticipated that this trend will continue.
Sudhir
Junankar, the CBI’s associate director of economic analysis, said, "The
downturn in the service sector has deepened, with business activity dropping
particularly sharply in consumer services.
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"The
events of 11 September compounded an already deteriorating situation,
especially for those firms reliant on the consumer. Confidence has taken a hard
knock with hotels, bars and restaurants feeling the worst of this."
