Service sector saw a surprise fall in sales and profits during the last three months
The UK's powerhouse service sector saw a surprise fall in sales and profits during the last three months, a survey has warned.
The gloomy findings from the CBI business group will add weight to fears of a sluggish and drawn-out recovery from recession.
Business and professional services firms had been expected to show a modest rise in profitability, but instead a 27% balance said profits had dropped.
A 13% balance of consumer-facing services firm also reported lower profits and business volumes, although the rate of decline is the slowest since February 2008.
Falling demand is putting intense pressure on the sector, leading to price cuts and denting profits, the CBI said.
The disappointing results from the survey follow revised official output estimates last week showing a 0.3% decline in the economy between July and September - a record sixth straight quarter of recession.
With these figures, the services sector, which accounts for almost three-quarters of UK output, declined by 0.1%.
CBI chief economic adviser Ian McCafferty said the figures "underlined the fragility of the economic recovery".
He said: "The recent weakness is disappointing, particularly as business and professional firms had hoped conditions would strengthen this quarter.
"Consumers and businesses are continuing to cut back on spending on goods and services, and firms operating in the sector are responding by cutting prices to stay competitive."
