Ready to ride out tougher times
Apr 22 2008 By The Journal
THE services sector in the North East has ridden the crest of a wave for a number of years and is one of the major drivers of the economy.
On a national level, it accounts for around three-quarters of the UK’s GDP and the sector’s output is continuing to grow, despite the slowdown in the wider economy. The sector has grown every month for almost five years.
Figures from the Office for National Statistics showed a 0.5% rise in services output in the three months to January, compared to the previous quarter.
This growth was driven by business services and finance, transport, storage and communication in the private sector as well as Government services.
The findings were echoed by the Chartered Institute of Purchasing and Supply, which found the size of the service industry was continuing to expand.
Its latest research, carried out with analyst NTC found activity rose for a third month to 54.0 in February from 52.5 in January. The rate of growth was the strongest since September last year.
And the latest quarterly CBI/Grant Thornton Service Sector report also found that business-to-business service providers are continuing to see rising volumes of work, increased profitability and higher numbers of staff being employed. However it warned of a tougher time to come.
Liz Smith, assistant director, CBI North East, said: “While demand has held up for most business services firms, some in management and legal services have been hit by slower mergers and acquisitions activity.
“Business services firms are doing what they can to insulate themselves from the slowdown, by focusing on increasing efficiency and seeking to reach new customers with new services.”
Alysoun Stewart, head of entrepreneurial advisory at report co-author Grant Thornton, said: “The credit crunch is starting to make its presence felt in the services sector.
“Of all the services, spending on hotels, bars and restaurants has taken the biggest turn since November and these firms are preparing for a difficult quarter. In the consumer sector, only leisure firms and those offering personal care forecast better profitability over the next three months.
“The business services sector as a whole will be battening down the hatches over the next three months.”
