Headcount to drop in consumer service sector next quarter, business group says

Employment is expected to decline in the UK’s consumer services sector over the next three months, according to a new survey.

The Confederation of British Industry found that employment remained flat in the sector – which includes hairdressers and gardeners – over the last three months.

It compared unfavourably to the business and professional services sector, which saw headcount growing at an above-average rate.

And while headcounts at consumer services firms are expected to drop in the next quarter, the business and professional services sector will likely continue to grow.

It was part of a wider gloom within the consumer service sector. The sector had seen its first growth in three years over the last quarter, but its prospects look bleaker going forward.

“It’s clear that the service sector has performed well over the three months to August, revealing strong volumes and profits growth in our latest survey as the economy reopened over the summer,” said Charlotte Dendy, CBI principal economist.

“However, the outlook between sub-sectors is set to diverge over the quarter ahead, with a deterioration in prospects expected in consumer services.

“Firms in sectors such as hotels, restaurants and travel, do not expect this strength to persist into the next quarter, reflecting the pressure that consumer services firms continue to face.”

Meanwhile, costs are rocketing at their fastest rate in around two years in both sectors, with this expected to continue at pace into the next three months.

Profitability, however, shot up at the fastest rate in six years for business and professional services firms, and it is expected to continue to grow in the next three months.

“With the vaccine roll-out continuing to deliver, it is vital that this autumn is used by the Government to help unlock investment in the private sector to cement the economic recovery,” Ms Dendy said.

“Major reform of an unfair, uncompetitive and unproductive business rates system would be a good place to start.”