By Daniel Hunter

Small business domestic turnover increased by 5 per cent between Q2 and Q3 2012 according to The Cashflow Barometer, a quarterly study by Invoice and Asset Based Lender, ABN AMRO Commercial Finance.

This increase was bolstered by the recruitment and services sectors, which have continued to see turnover grow since hitting their lowest points in 2009.

“The latest Cashflow Barometer supports recent reports that the UK economy is recovering," Peter Ewen, Managing Director at ABN AMRO Commercial Finance commented.

“The recruitment and services sectors in particular have been the real success stories in recent months, demonstrating consistent turnover growth. But not all businesses have been so fortunate and the product-based sectors have continued to struggle.”

The Cashflow Barometer is a quarterly indicator of the financial performance of UK small businesses, based on analysis of 700 companies.

Rise of the recruiters

The services sector experienced a rise in turnover of 4 per cent between Q2 and Q3 2012, and 3 per cent on the same time last year.

Meanwhile, recruitment companies’ turnover increased by 10 per cent between Q2 and Q3 2012, and 7 per cent against the same period in 2011.

The manufacturing and distribution sectors also saw a slight increase in turnover against the previous quarter (5 per cent and 3 per cent respectively).

However, engineering experienced a decrease in turnover of 2 per cent against Q2. In fact, since Q3 2011, each of the product-based sectors (manufacturing, engineering and distribution) faced a decline in turnover of 9 per cent, 8 per cent and 12 per cent respectively.

Distribution has fared particularly badly, having seen its lowest average turnover for five years, falling 13 per cent since Q3 2007.

“Although it’s encouraging to see such a positive outlook for the service segment of the UK’s SMEs, clearly more needs to be done to support businesses," Ewen added.

“Recruitment sector growth is likely to be based on increasing demand for temporary workers and isn’t guaranteed to last in the long-term. Similarly, engineering and manufacturing need a significant boost if we are to see the promised export-led recovery.”

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