Job losses at fastest rate in over 10 years

Jobs are being lost in the service sector at the fastest rate in over 10 years as the recession deepens, the latest CBI Service Sector survey has revealed.

The quarterly survey, conducted between 28th January and 11th February, covered 196 service sector firms – across business and professional services, such as accountancy, legal and marketing firms, and consumer services, including hotels, bars and restaurants, travel and leisure.

Hotels, bars and restaurants saw almost flat volumes of sales for a second quarter running. Sales volumes are expected to fall marginally again in the next quarter, with firms predicting that jobs and profits will be lost at a faster rate.

Volumes of sales in travel services continued to fall for a third successive quarter, with job numbers falling at a record rate. Firms raised their prices at a slower rate, while costs per employee came down, however any benefit was overwhelmed by falling sales and firms saw a record rate of decline in their profitability.

In the leisure and personal care sector, business volumes fell very sharply for the second successive quarter, with further strong cost increases.

Meanwhile firms selling services to businesses saw the volume and value of their business, profitability and numbers employed fall at the fastest rate in the survey's ten-year history. As concerns grow over lack of demand, companies plan to cut back on investments in plant, machinery, real estate and IT.

Consumer-facing firms also reported that jobs and profitability fell at a record rate. They saw steep falls in the volume and value of business, and the highest proportion of firms since the survey began in November 1998 said lack of demand was likely to limit business growth over the next 12 months.

Ian McCafferty, the CBI's chief economic adviser, said: "The effects of a global recession are being keenly felt by services firms. Consumers are clearly reining back their discretionary spending - postponing holidays, and spending less on leisure activities and personal care."

"Jobs are already being lost at the fastest rate in over ten years from the whole of the service sector, and firms' expectations suggest conditions will remain depressed for some time to come."

Words: Maria Bracken

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