Service-sector confidence weakens as profitability hits five-year low, CBI data shows
By Benjamin Chiou
Date: Thursday 28 Aug 2025
(Sharecast News) - Service sector activity across the UK continued the weaken in the three months to August, according to a survey released on Thursday by the Confederation of British Industry (CBI), as business confidence waned and profitability dropped to its lowest level in nearly five years.
Among business and professional services firms, optimism about the general business situation during June, July and August was in negative territory for the fourth straight quarter, though eased to -29% from -43% in the three months to May.
The gauge measuring business volumes across business and professional services came in at a net balance of -30%, though less severe than the -37% registered in the quarter to July.
Profitability among business and professional services firms came in at -42%, its worst since August 2020, as average selling prices rose at a much slower pace than the previous quarter (with just +4% reporting increases compared with +26% previously) and costs per person employed remained elevated (+62%, up from +60%).
Meanwhile, across consumer services, optimism fell for the eighth straight quarter at -34% from -42% previously, with the business volumes gauge at -26%.
Consumer services profitability was down for the 15th quarter running at -36%, from -43%.
"While there are pockets of resilience, our latest survey paints a grim picture of the services sector," said Alpesh Paleja, the CBI's deputy chief economist.
"Rising employment costs continue to drive cost pressures higher, while subdued demand conditions are holding pricing power in check. The impact is being felt in lower hiring, investment and profits, with companies increasingly shifting focus to short-term fire-fighting."
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