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Employment levels jump in the financial sector, according to CBI and PwC

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Numbers employed in the financial sector rose "unexpectedly" in the three months to June this year, at the fastest rate since the financial crisis began in September 2007, according to the latest CBI/PwC Financial Services Survey.

Asked how their business volumes fared in the three months to June, 44% said that volumes rose and 28% said they fell.

Business volumes grew across all the sub-sectors, apart from banking and securities trading, where volumes fell, and insurance broking where business was fairly flat. Business slowed most markedly with private individuals, but firms expect business to grow across all of the customer categories, including industrial & commercial companies, financial institutions and overseas customers, over the next three months.

Ian McCafferty, CBI chief economic adviser, said: "The financial services sector continued to recover over the past three months, but with slower volume growth, following three stronger quarters. What is heartening is the unexpected, strong rise in numbers employed in the sector, the fastest since the financial crisis began in 2007.

"Despite sharper cost increases and a small rise in non-performing loans, firms' profitability continued to improve with growth in volumes and incomes, and a slight widening of spreads."

For the first time since September last year, numbers employed in financial services rose, and this was at the fastest pace since September 2007. Firms expect numbers employed to continue growing, with the highest hiring expectation recorded since June 2007.

This is reflected in the increase in staff costs as a proportion of total costs, with the highest balance recorded since December 2007 during the past three months. Spending on training also grew, and is expected to pick up further next quarter. When asked what factors are likely to limit capital expenditure over the next year, uncertainty about demand was dominant, but the highest proportion since March 2008 cited shortage of labour, including managerial and supervisory staff.

When it came to business expansion in the year ahead, demand uncertainty was again felt to be the main constraint, but concern about the availability of professional staff also featured highly, with the highest figure recorded since June 2008.