A deep split has emerged in the service sector, as business and professional services firms thrive while consumer-oriented companies struggle, a new survey reveals.
The latest sector reading from the Confederation of British Industry (CBI) and Grant Thornton shows that market, management and legal services firms have led the business and professional services sub-sector to its fastest rate of growth since the survey began in November 1998.
The survey found that a balance of 39% saw the value of business rise over the last three months, way above analysts' predictions of 10%.
A further 41% of firms reported an increase in business volumes, exceeding expectations of a 12% balance. Meanwhile, optimism rose for the first time since February.
But while business and professional services firms flourished, consumer services firms fell flat.
Profitabily levels remained down with a balance of minus 2% reporting rises. Business volumes hovered at a disappointing 0%.
The sub-sector also saw marked drops in optimism and employment levels.
"We are currently witnessing the contrasting fortunes of a two-speed service sector," said Steve Edmonds, head of entrepreneurial services at Grant Thornton.
Ian McCafferty, chief economic adviser at the CBI, added: "The increasing parsimony of shoppers is laid bare in the figures from consumer services companies.
"The depressed conditions these firms face, taken together with the tough conditions in the high street and subdued manufacturing markets, point to the need for policymakers to take a very cautious approach. Anyone tempted to believe that the economy can weather further policy-related cost increases should think again."
