On-trade picture growing, but mixed, CBI survey finds

Expansion in the UK on-trade sector has continued to grow overall, a new report out this morning said, but profits have  been hit.

The CBI’s latest Service Sector Survey, which covers the hotels, bars, restaurants, travel and leisure firms, found that consumers services had continued to see growth, ahead of business and professional services sub-sector.

However the picture appeared to be relatively mixed.  Around 40% of the consumer businesses survey reported a rise in volume, with 24% saying volume growth was likely to ease over the next three months – but  9% reported volumes were down.  Overall profitability had improved in the last quarter for 36% of the firms asked, although it fell for around 20% of businesses.

There was some evidence of renewed optimism with nearly a third (29%) reported renewed optimism  in the business climate – but this was down nearly 10% from August, when the figure was 37%.

However, the annual survey also found profits had been hit as costs across the service industry rose at the fastest rate in eight years, which it said was a reflection of the “strong expansion” of headcount and training costs. Around 45% of businesses said employee  numbers had risen in the last three months, with only 3% saying they were down, and  16% expect to be hiring over the next quarter.