Firms in the service sector, which accounts for around three-quarters of gross domestic product (GDP), are hiring more staff and feeling at their most optimistic since records began in 1998, according to business group the Confederation of British Industry (CBI).
Its recent survey found that business owners in the consumer and professional services sector were increasingly happy about the economic situation in the UK but were experiencing difficulties in finding employees with the right skills, which could constrain their growth over the coming year.
Businesses in the consumer services sector, such as bars, pubs, restaurants, travel and leisure firms, were reportedly seeing levels of business that were “comfortably above normal”, while firms offering professional services, such as accountants, lawyers and marketers said that their business levels were above normal for the first time since November 2007.
A spokeswoman for the CBI said that the strengthening economic recovery was encouraging consumer and business-focused services firms to take on more staff and invest in training and information technology.
However, she added that a rising number of firms, particularly in business and professional services, are having problems finding the right staff and warned that the skills gap could act as a growing constraint on business expansion in the sector over the year ahead.
The UK’s economy is growing faster than that of any other in the G7 group of countries and the Bank of England is watching closely for signs of inflationary pressure coming from the labour market. So far, wages are growing at close to the rate of inflation but are expected to pick up more strongly as the year goes on.