Latest CBI Monthly Services Sector Survey & Growth Indicator

Business volumes continued to fall in the three months to January, at an accelerated pace, according to the CBI’s monthly Services Sector Survey. The decline in consumer services volumes, while slowing slightly, remained significant. Business and professional services saw volumes fall, after stagnating at the end of 2022. Meanwhile, employment in both sub-sectors was relatively unchanged.

In the next three months, average selling prices are expected to rise strongly again, business volumes will keep falling - albeit at a slower rate – while there will be a renewed fall in employment in consumer services.

Key survey figures for this month include:

• Business & professional services: Volume of business -13%; Numbers employed +3%
• Consumer services: Volume of business -47%; Numbers employed +1%

Looking ahead to the next three months…

• Business & professional services: Volume of business -7%; Numbers employed 0%; average selling prices +31%
• Consumer services: Volume of business -29%; Numbers employed -10%; average selling prices +59%.

PRIVATE SECTOR ACTIVITY DECLINED IN JANUARY – Growth Indicator

Across the economy as a whole, private sector activity declined in the three months to January, at broadly the same pace as last month (-16% from -13% in December). This marks the sixth consecutive rolling quarter in which activity has fallen and, looking ahead to the next three months, private sector activity is expected to fall again, but at a slower pace (-8%).

Alpesh Paleja, CBI Lead Economist said

“The economy has continued to show signs of struggling at the start of 2023. The services sector has repeated the falls in business volumes that we saw in the second half of last year, especially within consumer services firms.

“Inflation continues to stalk businesses in many sectors, but especially those dependent on money in the pocket of consumers. While pipeline cost pressures are showing signs of peaking, they will remain a drag on business growth in the near-term.

“The Government will need to set out urgent growth actions in the coming weeks - especially at the Spring Budget – to get firms investing, if the economy is to regain some momentum and not limp through 2023.”