Service sector optimism grows at fastest rate on record
Optimism over the future of the service sector increased at the fastest pace on record in the three months to May as the UK’s economic recovery from the pandemic gathered steam.
According to the CBI’s latest quarterly Service Sector Survey, sentiment about the general outlook for the professional services sub-sector jumped from +23 per cent to +63 per cent, a record leap.
Meanwhile, buoyed by the reopening of non-essential retail and hospitality, the consumer services sector saw optimism jump from -55 per cent to +33 per cent.
The picture was more mixed for volumes, with business and professional services volumes rising at the fastest rate on record last quarter, while consumer services volumes continued to decline but at a much slower pace.
But both sub-sectors expect strong growth in volumes in the quarter ahead.
The CBI’s data comes after IHS Markit’s flash PMI reading for May suggested that business activity in the UK expanded at its fastest rate since 1998 this month.
Driven by the government’s rapid progress with the vaccination scheme, ministers have been able to peel back restriction layer by layer, allowing business activity to take off.
The service sector is at the core of the UK’s economy, accounting for 81 per cent of total UK economic output in 2020.
Ben Jones, CBI Principal Economist, said: “With the reopening roadmap on track and the vaccine rollout delivering, it’s no surprise to see an uptick in optimism across the sector.
“Both sub-sectors are expecting strong business growth over the next few months as restrictions continue to lift.”
But, he added, “clarity on future social distancing requirements and workplace testing would go further towards smoothing the route to recovery.”