By Daniel Hunter

Small business domestic turnover increased by 3 per cent between Q1 and Q2 2012 according to The Cashflow Barometer, a quarterly study by Invoice and Asset Based Lender, ABN AMRO Commercial Finance.

This increase was led by the services and recruitment sectors, which saw turnover grow between Q1 and Q2 2012 as well as year on year (YoY). Conversely, turnover in the manufacturing, engineering and distribution sectors decreased over these periods.

The data echoes recent UK GDP figures from the ONS, which showed that the UK economy has continued to shrink for a third consecutive quarter — weighed down significantly by the construction sector which fell by 5.2 per cent in Q2.

“This latest Barometer reflects the wider UK economic picture as the services sector continues to perform well, while industries producing physical goods lag behind," Peter Ewen, Managing Director at ABN AMRO Commercial Finance commented.

“George Osborne’s determination to increase manufacturing and construction through his ‘funding for lending’ scheme, coupled with the latest UK GDP figures, highlight the importance of boosting the UK’s production industries."

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

Services lead the way

The services sector experienced a rise in turnover of 8 per cent between Q1 and Q2 2012, and 5 per cent YoY.

Meanwhile, recruitment companies increased turnover by 15 per cent between Q1 and Q2 2012 and 9 per cent against the same period in 2011.

In contrast, turnover fell in the product-based sectors (manufacturing, engineering and distribution) between Q1 and Q2 2012 and YoY. The largest drop was in manufacturing, which experienced a decrease in turnover of 10 per cent between Q1 and Q2 this year.

The engineering sector saw a drop in turnover of 4 per cent between Q1 and Q2 and 3 per cent YoY. Distribution saw a similar fall of 3 per cent between Q1 and Q2 and 5 per cent YoY.

“It’s encouraging to see such strength in services and recruitment sectors, but manufacturing, engineering and distribution have all struggled through another quarter. The ‘march of the makers’ is clearly taking some time to materialise," Peter Ewen commented.

“The recruitment industry has also been buoyed significantly by increasing demand for temp workers, so it remains to be seen whether it can maintain this performance long-term.”

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