In Focus Commercial Credit
Small-business confidence on the rise after two year low
Mixed confidence figures are a result of changing circumstances in the wider economy
Gavin Wraith-Carter Managing director, Hitachi Capital Business Finance
Set against the warnings of a shrinking UK economy and full-blown recession, the nation’s small-business community is holding strong – with an upturn in growth predictions across six industry sectors – according to our new data. In contrast to the various market reports
that focus on historic sector trading and output figures, the Business Barometer is a forward-looking study from Hitachi Capital and offers an early snapshot on how small businesses are feeling going into the autumn months. Overall, for the three months to 30
September, around one in two small firms (49%) will be holding their position, with twice the number predicting growth (35%) over contraction or decline (16%). Furthermore, there are signs that the fall
in small-business growth predictions noted during the second quarter – the first fall in 12 months – is already beginning to correct itself.
More sectors see a rise in confidence Whilst four sectors saw notable falls in small- business growth predictions for the second quarter – manufacturing, construction, retail, and real estate – six industry sectors actually saw a rise in the number of business leaders that predicted growth. This was most significant in the
professional-services sectors, an indication perhaps that Brexit is creating work for small businesses that provide consulting services that relate to business planning, regulation, and accounting. In the finance and accounting sector, the percentage of small businesses predicting
September 2019
Given the market context of low output in these sectors, the research suggests business owners in manufacturing and construction are being cautious and focusing on holding firm.
It is also important to note that, whilst transport, building, and manufacturing businesses have been faced by tangible challenges from Brexit uncertainty, small businesses that provide professional and consulting services seem to be prospering
growth rose sharply from 33% to 48% in just three months. In legal services, growth predictions have risen from 37% to 44% over the last six months.
Manufacturing and construction Small-business growth predictions in manufacturing and construction continued to fall quarter-on-quarter – although, curiously for these sectors, the percentage of small businesses predicting contraction was also lower than many other sectors.
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Transport and distribution This has emerged as the only sector where more small-business owners now predict contraction rather than growth. The forthcoming outcome of Brexit may indicate whether this sector viewpoint is a short- term reflection of current market uncertainty or part of a deeper, long-term trend.
Conclusion At first glance, the results of our tracking study look similar to last quarter, but dig deeper and there are some significant findings. First, the spring months saw the first fall
in small business-growth predictions for a year and there are encouraging signs now that this was not the start of a seasonal slide. Second, there are some major variations by
sector this summer and, in six sectors, some notable rises in growth predictions. It is also important to note that, whilst
transport, building, and manufacturing businesses have been faced by tangible challenges from Brexit uncertainty, small businesses that provide professional and consulting services seem to be prospering. Market uncertainty is the one certainty
for the months ahead and we are working hard to help small businesses to exploit the opportunities from the current market – to grow and fully realise their potential. CCR
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