CBI: Consumer service firms continue to struggle

By Mark Wingett

- Last updated on GMT

Related tags: Economy, Business, Cbi

CBI: Consumer demand is unlikely to pick up
CBI: Consumer demand is unlikely to pick up
Consumer service firms, such as restaurants and hotels, continued to struggle in the three months to February, as the gap in sentiment between firms that rely on consumer spending and those that benefit from business investment widened during the period.

According to the latest survey by the Confederation of British Industry (CBI), firms offering business and professional services saw their volumes of business grow at the fastest pace since mid-2008, with sentiment rising to +10 from -4.

However, consumer service firms remained in negative territory at -11 against -22 in November.

Business flat

The survey, which is based on responses from 170 firms in the services sector, found that consumer service firms expect business to be flat in the next three months.

The CBI said that there was a growing divide between the two sectors, and that rising prices and slow wage growth meant that consumer demand was unlikely to pick up quickly.

Ian McCafferty, chief economic adviser at the CBI, said: “For the past year, consumers have been cutting back on leisure activities and other discretionary spending, with no indication of improvement any time soon.

“On the one hand, consumer spending is constrained, held back by rising prices and squeezed real incomes. On the other, there are signs that spending by businesses is picking up, helping to re-balance the economy away from consumer-driven growth.”

Mark Wingett is associate editor at BigHospitality sister publication M&C Report

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