Service sector buoyant with record number of jobs on offer

Confidence among businesses has been boosted by downward pressure on pay and labour costs, which means that it is now cheaper to hire in Britain than Spain and considerably less than in Germany, France and Italy.

Almost 50pc of consumer service businesses, including hotels, bars, restaurants and the leisure industry, said they were more optimistic than three months ago. Only 4pc were gloomy. The growth in the volume of business was the slowest for a year but a more robust improvement is expected before the end of the year.

There was a similar pattern among professional services. Business volumes expanded for the fifth quarter in a row with 33pc reporting an increase and 17pc a slippage.

Katja Hall, CBI deputy director general, said the slowdown did not mean a gear change in recovery. “It’s encouraging that our service sector firms continue to feel upbeat especially when looking ahead to the next quarter,” she said.

A large proportion of firms have embarked on further plans for expanding their business and workforce. Rather than a slowdown, their main worry is whether they can recruit either the number or the quality of personnel they want.

Professional services businesses in particular are worried they will not be able to fill vacancies. The number of jobs on offer in the second quarter reached its highest rate in nearly seven years and in the final quarter of the year is expected to be running at the strongest level since the CBI survey began in 1998.

Investment plans in consumer services businesses are “particularly robust” with plans for spending on vehicles, plant and machinery running at a record high.

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