IT spending within service sector to rise

IT spending within service sector to rise

Service sector firms plan to increase their capital spending over the coming year, particularly in IT, according to new research by the Confederation of British Industry (CBI).

In its quarterly Service Sector Survey, the CBI revealed that optimism in the services sector is as high as it has been since the survey began in 1998. The result is that many companies are now looking to bolster their capital expenditure with IT being cited as one of the main focuses.

The survey of 139 companies found that in the three months leading up to February 2014 there was an increase in activity among service sector firms. This is the third consecutive quarter that optimism has been on the rise

Nearly half (48 per cent) of respondents from consumer services companies stated that they were more optimistic than three months ago. In the business and professional services sector the figure rose to 51 per cent with only five per cent in both camps saying they were less optimistic.

This optimism is reflected in the fact that business expansion plans were the strongest they had been for a decade. In particular capital spending on IT was identified as one area that looks set to be bolstered over the next 12 months.

Headcount is another area set to benefit; 52 per cent of consumer services companies said that employee numbers would go up in the next quarter, with only 10 per cent saying that the number would fall. Meanwhile, almost three quarters (73 per cent) of business and professional services firms said they were planning to expand their business over the next year.

Anna Leach, CBI’s Head of Economic Analysis, said: “2014 has started well for our service sector firms. Business activity is up, optimism is high and profits are improving too.

“It is encouraging that strong growth is being reported across the whole sector. Headcount is predicted to rise next quarter and expectations for an expansion of business over the year ahead are the strongest for a decade."

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