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Service sector weakens but decline expected to slow, CBI

More modest decline expected in the coming quarter.

The UK services sector --comprising business, professional and consumer services -- saw a decline in its business during the past quarter to February 2012, according to a survey conducted by the Confederation of British Industry (CBI).

However, the decline in services sector is anticipated to slow in the next quarter.

Ian McCafferty, chief economic adviser at CBI, said: "Although volumes of business activity continued to worsen across the UK services sector in the past quarter compared with the previous quarter, there are some tentative signs that conditions may be levelling out.

"There's been a slowdown in the rate of decline in business volumes for consumer services firms, and they expect this to continue in the coming three months."

In consumer services, a balance of -25 per cent of firms said that volumes of business fell, while -23 per cent said sales were broadly in line with expectations, and -41 per cent significantly less negative than the previous quarter.

In business and professional services, -11 per cent said that over the previous quarter business volumes declined at a slower pace than had been expected (-20 per cent). The decline in business values was more marked, at -31 per cent.

Consumer services includes hotels, bars and restaurants, travel, and leisure. Business and professional services includes accountancy, legal and marketing firms.

McCafferty added: "Meanwhile, firms providing business and professional services have seen business activity deteriorate, but not to the extent they had anticipated, and they too are expecting a more modest decline in the coming quarter."

"Business confidence remains fragile, and will continue to be so given the continuing uncertainty in the Eurozone. However, there are some signs that after the very sharp fall in confidence at the height of the crisis last autumn, sentiment is stabilising," concluded McCafferty.

The CBI survey was conducted from 30 January and 15 February 2012 and covered 167 firms.