A quarterly survey from the CBI and Grant Thornton reveals confidence has risen across the service sector for the first time in 18 months.
In addition confidence rising in the hospitallity sector is also rose for the second successive quarter among business and professional services firms, such as employment agencies and computer consultants.
However the survey cautions that the rapid rise in optimism have not yet fed through to sales, with consumer services firms seeing business volumes fall over the past threemonths.
A net balance of minus 11% of firms said volumes fell, which compares with minus 24% recorded last survey.
For the coming quarter, business volumes are predicted to rise by a balance of plus 8%, the most positive expectation for almost three years.
Mark Byers, head of Grant Thornton's recovery & reorganisation, says: “Whilst short-term business confidence appears to have returned to the service sector, its sustainability remains uncertain as a much more cautionary outlook is expressed for the year ahead.
“Businesses across the service sector experiencing the first confidence rise in 18 months appear to be banking on the Christmas rush to help restore what at present are poor profitability levels.
“A strong Christmas trading period may be in prospect, however, for a return to longer term business confidence which avoids an unwanted new year hangover, it is essential that 2004remains free of rapid interest rate rises and constraining government budgets.”