28 June 2010

Discretionary spend still hard to find

Poor performance in the service sector in the three months to May shows the consumer is still cautious about discretionary spending, says the CBI.

The latest survey of the consumer services sector – including hotels, restaurants, travel and leisure – found that 35% of firms reported a fall in the volume of business. The overall profitability of companies fell to levels not seen since last August, and there was a faster-than-expected rise in costs.

Ian McCafferty, CBI chief economic adviser, says: “Consumers are cautious about spending on activities like eating out. But it is interesting to see travel service firms doing better, suggesting people still want a well-earned break.”

» B&Q's profits were £146m, up 14.5% in the 13 weeks to May, compared with the same period in 2009. However, like-for-like sales fell by 2.8%. Ian Cheshire, group chief executive, said poor weather affected sales over the period, adding that driving out costs and boosting margins had countered the drop in sales.