A quarterly report from the Confederation of British Industry (CBI) shows volume growth at its fastest rates since May 2016 among business and professional services firms.
Business and professional services saw business volume growth of 8%. However, this quarter saw a rise of 44% on total cost per person, the fastest increase since August 2008 (49%). A similar increase in costs (41%) is predicted next quarter.
With these rising costs, profitability has seen a decrease, with 25% saying they haven’t seen profitability up since the previous quarter, compared to the 21% who said they had.
The report also noted that confidence was down on last quarter, with only an 8% increase compared to the previous quarter (14%).
“It’s fair to say that the performance of the UK services sector is very much a mixed bag this summer,” said Anna Leach, CBI head of economic intelligence.
“With the latest GDP data showing no growth in consumer spending in the second quarter, it’s no surprise that consumer services firms are particularly downbeat. And the availability of skills and labour is a real risk to plans for investment and growth. This underlines the degree of care which will need to go into crafting the UK’s future migration system to ensure that firms have access to the people needed to underpin growth and prosperity," added Leach.