Onrec logo The Online Recruitment Resource

Poor performance of business services sector no barrier for optimism says Bibby Industry Index

Business service Index hits lowest point of all sectors, but confidence still remains

Trading conditions for the business services sector have declined despite fewer than one in five (19 per cent), believing the current market to be tough, according to the latest Bibby Financial Services Business Factors Index.

As optimism from Q3 remains in this sector, there has also been an improvement in market conditions compared to the previous Index. The majority (69 per cent) feel that the recovery of the sector will be in line with that of other sectors, an increase from 54 per cent. This is in line with the UK-wide figure of 63 per cent.

Furthermore, 12 per cent feel that their business is thriving and that they have actually benefited from the recession, an increase of two per cent on the last quarter.

Economic recovery for the sector does, however, still appear to be distant, with over half (56 per cent) feeling that recovery won’t take place for at least a year – up from 41 per cent in the Q3 Index. Additionally, 19 per cent feel that we could see a recovery by the Spring of 2010 – this feeling is shared by fewer in the industry than in the last Index where the figure stood at 41 per cent.

The Business Factors Index, compiled by specialist business finance provider Bibby Financial Services, tracks movements in small business turnover since July 2007. The trends derived from this data have been collated alongside the results of a series of interviews conducted with more than 300 business owners from a range of businesses across the UK.

The Index for the business services sector (which includes recruitment and security) shows that:

  • Disregarding August, which is traditionally a quiet month for the sector, the average Index point over the period to December was 81.8, the lowest of all the sectors

  • The trend over the period was one of decline, with November’s Index point hitting 79.5, the lowest point of all the sectors in the last six months.

  • Only three per cent feel that their industry will be the first to recover compared to 10 per cent in the previous Index.

Edward Winterton, recruitment finance specialist at Bibby Financial Services commented: “With fluctuating unemployment figures, constant legislation and red tape affecting the sector, it is no surprise that in the midst of the economic turmoil of the last two years, the UK’s business services industry is suffering.

“The optimism shown by our study compared to Q3 2009 is all well and good, but it is important for these firms to ensure they are prepared for growth and can make investments in their business where needed. It is this further access to finance which is so desperately needed in order for these businesses to move forward.

“Bibby Financial Services will ensure our insights into recovery are utilised in supporting business recovery in 2010.”

This, and subsequent quarterly updates to the Business Factor Index will be issued by Bibby Financial Services and is available online at www.bibbyfinancialservices.com