UK services companies suffered further falls in business in the past three months, in spite of hopes of a rebound, according to a key survey which will raise further concerns about the state of the economy.
The survey, published today by the Confederation of British Industry (CBI), signals significant overall falls in the volume and value of business in the past three months for consumer services and business and professional services firms, as well as tumbling optimism.
It also shows a continuing slide in employment among consumer services firms.
David Lonsdale, assistant director of CBI Scotland, said of the findings of the business organisation's latest UK service sector survey: "Weak confidence and uncertainty over the general economic outlook is holding back consumer spending in parts of the hospitality industry and commercial spending on professional services firms north of the Border.
"This is a challenging time for many Scottish firms, who are having to work harder and think more imaginatively about how they can sustain, let alone grow, their business."
The survey is the latest sign of a weak performance by services, the dominant sector of the UK economy, at a time when manufacturing has gone into reverse.
And it adds to the pile of evidence pointing to significant underlying weakness in the UK economy in the third quarter.
Official figures have shown the services sector contracted by 0.1% in the second quarter, when overall gross domestic product tumbled by 0.5%.
Manufacturing output, according to the Office for National Statistics' figures, dropped by 0.9% in the three months to June.
A survey published earlier this month by the Chartered Institute of Purchasing and Supply (CIPS) showed UK manufacturing output tumbling at its fastest monthly pace for more than three years in July.
The CBI's latest industrial trends survey, published last week, showed UK manufacturers had suffered a significant deterioration in their order books in the last month or so, with export and domestic business hit, and were forecasting their output volumes would be flat over the coming three months.
Meanwhile, according to CIPS, the UK service sector in July recorded its weakest monthly movement in activity since snow-disrupted December 2010.
The CBI's services survey was conducted between July 27 and August 15, with 196 firms participating.
Further falls in business value and volume were predicted by consumer services firms and business and professional services firms for the coming three months.
Subtracting the percentage of consumer services firms reporting a rise in the value of business in the past three months from that experiencing a fall, a net 12% suffered a drop, pointing to a slightly steeper rate of decline than in the survey published in May.
A balance of 22% of consumer services firms had, back in the spring, predicted the value of business would have risen in the past three months.
A net 10% of consumer services companies reported a drop in business volumes in the past three months, again dashing hopes of a rise, and a balance of 32% considered levels of business in value terms to be below normal.
Meanwhile, a net 8% of consumer services companies reported a fall in employment in the past three months. A balance of 19% predicted a further decline in the coming three months.
In the business and professional services sub-sector, a net 37% of firms considered business levels to be below normal in value terms. A respective net 16% and 21% reported drops in value and volume of business over the past three months. A balance of 3% of firms in this sub-sector said employment rose in the past three months.
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