West business confidence growing but outlook is challenging, survey shows

Confidence is increasing among many West firms and they are ambitious for growth, one of the region’s key business surveys shows today.

But many are also fearful of the impact the wider economy could have on their business and there are still challenges ahead in 2013. And while many firms are recovering in areas such as sales and orders, they have not yet got back to the levels they were at early last year.

The mixed picture in the West emerges today from the regional figures in the latest British Chambers of Commerce (BCC) Quarterly Economic Survey, which gauges sentiment across eight key business themes including employment, orders, sales and cashflow.

Today’s results – for the final three months of last year – reveal that, overall, the 317 business across Swindon and Wiltshire, Bath, Bristol and Gloucestershire, that took part in the survey ended 2012 with confidence increasing across all eight measures.

Export sales and orders were particularly strong (up by 18% and 13% on the previous quarter) but while confidence around UK sales, order and cashflow also rose, they failed to make up for significant reduction earlier in 2012 and ended the year lower than they started it.

In the light of the mixed results, Phil Smith, managing director of Business West, which stages the survey in the region on behalf of the BCC, urged the Government to take bold and imaginative measures to boost growth and help businesses of all sizes deliver a lasting recovery throughout 2013 and beyond.

Mr Smith said: “The latest set of survey results show a steady improvement in terms of business confidence and perceptions of the UK economy. UK sales and orders are showing significant improvement on the previous quarter and export sales and orders are picking up. There are signs that the West is making a positive contribution to growth and the UK economy but needs to do much better on exporting – and do it faster than current signs would suggest.

“Overall the outlook for 2013 looks positive with companies expecting turnover and profitability to improve and the prospects for exporting look better too. In general there has been a positive change across all indicators this quarter, so the economy is definitely moving in the right direction, highlighting the determination and ability of UK businesses.  However some indicators such as UK sales, orders and cashflow still remain negative when compared with last year and every effort must be made by government to kick start growth.

“There is still much more that the Government could do to stimulate demand and improve the availability of finance for businesses that want to grow. Many firms across the West are doing well, but we need action from government to build on that whilst also providing the right kind of support to those firms that are still struggling.”

The survey results reveal:

• 44% of respondents reported that UK sales had improved and 36% of respondents stated that UK orders had also improved with just under 30% reporting an improvement in export sales and orders.
• Lack of demand and finance availability remain the biggest barriers to growth for respondents – with 21% reporting lack of demand and 20% citing finance availability as a barrier to growth for their business. These barriers have been consistently reported as the biggest restrictions over the year, alongside lack of management time which 11% of respondents found to be a barrier.
• More than a third of respondents saw competition as more of a concern than three months ago with taxation and inflation also of concern to 26% of businesses. However two thirds still expect their prices to remain constant over the next three months.
• Cashflow remains an issue with 23% of respondents reporting deteriorating cashflow, while finance availability has improved 11% on the previous quarter.
• Just over 60% of companies are still reporting that they are operating below capacity. However this is a 16% improvement on the previous quarter, showing that businesses have the capacity to improve and expand.
• Mirroring national employment trends 35% of respondents stated they had increased their workforce in the past three months. A third also stated that they expect their workforce to increase over the next three months, giving a more positive outlook for future employment opportunities in the region for 2013.
• The outlook looks positive for 2013 as most companies expect both turnover (67%) and profitability (61%) to improve over the coming year.