Restaurant Sector Steady While Business Confidence Low

Business confidence dropped to an all time low for the month of February, according to the Chartered Institute of Purchasing and Supply survey. However, growth in the service sector remains steady. The survey showed the sharpest rise in input costs was in the hotel and restaurant sector.

The input price index fell to 58.6 in February from 58.9 in January. However, the output price index climbed to 53.2 from 52.0 the previous month.

While it suggests growth in the service sector remains solid, there is little sign of any underlying acceleration in the sector.

Essentially business confidence is low, and the survey reflects that. There were expectations for the service sector business activity index to rise in February, but it dropped instead.

Also, the key index stayed above the 50 mark, which divides expansion from contraction. The figures are unlikely to challenge the idea the Bank of England may have to raise interest rates again.

For the past six months, The BoE has kept rates at 4.75 percent. No change is expected in the next week, but analysts predict a quarter-point jump on either April or May. Because of the weaker growth in new business, there has been a slump in overall activity.

"The report as a whole is weaker than expected," London Chief Economist at Investec Philip Shaw. "While it suggests growth in the service sector remains solid, there is little sign of any underlying acceleration in the sector."