IT and telecoms services companies continue to show
resilience, but may soon face job cuts like other firms in the
sector, according to theConfederation of British Industry
(CBI).
Unlike most other services firms, business volumes and
profitability for
IT and telecoms service providers have remained stable in the
past three months, according to the latest
CBI quarterly survey of more than 140 UK professional services
companies.
IT and telecoms services firms had
bucked the downward trend in an earlier survey, but are now
less optimistic about the future, with volume of business expected
to fall dramatically in the next three months leading to
job losses, the survey found.
This is more consistent with the
rest of the services sector, where most reported steep falls in
business volumes and profitability, the CBI said.
Ian McCafferty, chief economic advisor at the CBI, said recent
economic data has highlighted just how rapidly the economy is
weakening. "So far, job losses have been relatively small across
the whole of the service sector, but with firms predicting faster
falls in volumes, values and profitability in the next quarter, we
can expect to see significant job losses in the coming months," he
said.
The survey found that firms selling services to businesses saw
the volume and value of their business, profitability and numbers
employed fall at record rates.
Companies are cutting investment plans sharply as worries about
future demand intensify.
Companies operating in consumer services saw profitability fall
sharply for a third successive quarter. Business volumes and values
also fell strongly, after the previous quarter's small gains.
A record number of firms said the cost of finance was likely to
limit
capital expenditure in the next year.
Although the workforce grew slightly for the first time in a
year, businesses are predicting much larger job cuts in the next
quarter.