Contractors in the financial services sector will find plenty to cheer them in the latest report from the Confederation of British Industry and PricewaterhouseCoopers, which has particularly good news for the many IT contractors and marketing interims serving the sector.
The 90th CBI/PwC financial services survey shows that, up to the end of March, not only has the sector grown for the eighth quarter running, but for the first time in a year there is also a general rise in confidence. Companies will be investing more in IT and marketing over the coming year, and employment is on the rise too.
Continued growth and confidence in financial services
Sales volume rises in the quarter to March 2012 were enjoyed by 44% of the financial firms surveyed; 21% reported a fall, with the resulting +23% balance well above the long-run average of +12%. And, according to the report, the trend looks set to accelerate in the current quarter.
CBI’s Chief Economic Adviser, Ian McCafferty, is pleased to be reporting such positive news. “Financial services sales volumes and income continued to rise this quarter, putting the sector’s recovery on a firmer footing,” he says.
Of course growth is one thing, but profit is another. Yet here too there is good news, with +21% of the firms taking part seeing their profitability so far this year rise more rapidly than for most of 2011; and that’s despite rising costs.
Employment, IT and marketing growth may lead to contract growth and rate rises
Some of the worst risks around the eurozone crisis have eased, leading to improved optimism levels and business investment intentions, according to McCafferty. Mark Hannam, a financial services leader at PwC, agrees.
“Banks are much more confident about their sector,” he says. “This confidence is translating into recruitment, with many banks reporting that they plan to increase headcount over the coming months. Banks are also planning to invest in their businesses, particularly in their digital offerings, and customers should reap the rewards of this.”
Whilst the back end of 2011 saw little investment in IT and marketing, financial services firms are starting to make up for that, having already kickstarted investment in both areas this year. And IT growth is expected to strengthen, as firms strive to improve profitability through even greater efficiencies.
But it’s not just in IT and marketing that contractors can expect growth. In the first quarter of 2012, the number of financial service employees as a whole grew unexpectedly by a balance of +19%, against an expectation of -18%, and a similar increase is forecast for the current quarter. At the same time, +35% of firms feel there is a labour shortage, which is likely to lead to increased demand for contractors, and an upward pressure on rates for highly-sought-after skills.
Financial services sales volumes and income continued to rise this quarter, putting the sector's recovery on a firmer footing.
Ian McCafferty, Chief Economic Adviser, CBI