By Daniel Hunter
The UK’s army of roofers, builders, hauliers and security contractors are making significant progress on the long road to recovery with cross-sector growth in 2013, according to a study of the output of thousands of small to medium-sized enterprises (SMEs) during the first two quarters of the year.
The Business Factors Index report is released by leading independent invoice finance provider Bibby Financial Services. The report shows across a client base of 4,000 SMEs, there has been an increase in performance from Q1 to Q2 in all sectors - manufacturing, construction, transport, wholesale and business services.
Both manufacturing and construction sectors have experienced their strongest Q1 and Q2 activity since the Index began in 2007, pointing to a potential index record for the two sectors for the rest of the year.
The Business Factors Index compiles its results based on the turnover activity of Bibby Financial Services’ 4,000 UK clients, predominately made up of small and medium sized businesses with a typical turnover of £1.5 million and ten employees. According to the Federation of Small Businesses, SMEs such as this make up 99.9 per cent of all businesses in the UK.
The results come following last month’s official output data showing that gross domestic product grew by 0.6 per cent for the second quarter of the year.
David Postings, UK CEO of Bibby Financial Services which currently provides £370 million in funding to SMEs, said the results provide encouragement. He says: “In line with wider economic activity, we have seen positive performances from SMEs across all five sectors during the first half of the year.
“Our customers are a good indicator of the wider economy because of their industry spread and size. While we are not out of the woods just yet, the Business Factors Index for the second quarter shows a period of steady growth among SMEs using invoice finance.
“This funding facility provides the platform they need to grow and to push the economy forward to recovery.”
According to the Asset Based Finance Association as many as 40,000 businesses in the UK use alternative funding, such as invoice finance.
In addition the Index also reveals the results of an independent SME survey of 450 business owners, which shows increasing levels of orders during the second quarter in eight out of 10 of the UK’s regions* compared to Q1, and increasing confidence in six out of 10, also compared to Q1.
Across the UK, the number of SMEs reporting an increase in orders rose by a third in the second quarter compared to Q1. In terms of confidence, the level of SMEs which said they are hopeful about the future rose by ten per cent across the national sample base, again compared to Q1.
Mr Postings continues: “On the face of it, the first two quarters of the year have delivered some positivity, but we do need to sound a note of caution as there is still a long way to go.
“Many firms still struggle with issues such as the costs of running a business and maintaining working capital, so against this backdrop it is encouraging to see the kind of results we have in Q2.”
The Business Factors Index measures turnover activity of the UK clients of Bibby Financial Services against a base point of 100.
For Q2 the manufacturing sector stands at 124.2, the best performing Q2 since the Index started and the best performing sector across the Index. Construction is also buoyant recording a figure of 110.2, which is also the best performing Q2 for that sector.
Across the five sectors, all of which have increased on Q1, the overall Index level is at its second highest point currently standing at 105.8, compared to the record 106.5 in Q2 2012.
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