Service sector business levels accelerate to five-year high

Hotels, restaurants and other consumer services firms have recorded the fastest increase in business volumes in more than five years, a study by the Confederation of British Industry and accountants Grant Thornton has revealed.

According to the survey, 62% of consumer services firms saw business volumes increase over the past three months, while just 12% said they had seen them decline.

The report reveals that hotel, bar and restaurant businesses had benefited from buoyant consumer spending and that, as a result, optimism in the sector was running high. It also points out that the level of business being reported was above normal for the time of year - for the first time in more than two years.

Looking ahead, hotel, bar and restaurant companies said they were more confident in the future and expected business to continue to grow over the coming three months, although at a slightly slower rate.

About 75% of respondents said they expected their levels of business to have increased in the three months to February, while for the coming three months that figure had fallen to about 60%.

Steve Edmonds, head of Grant Thornton's entrepreneurial business services division, said: "There is real evidence of an upturn in the service sector. However, rising employment costs and a growing skills shortage may still take the shine off the sector's impressive results and restrict its growth."