According to a study by the UK’s largest independent invoice finance provider, Bibby Financial Services, SMEs in the services sector outperformed manufacturing and construction businesses in the second quarter, following a slow start to the year.
The Business Factors Index report, published this week shows across 4,000 SMEs using invoice finance there was a significant increase in performance from Q1 to Q2 in all sectors - with business services making a strong recovery from the first three months of 2013.
Andy Tait, Sales and Marketing Director at Bibby Financial Services says: “During the first quarter, the wider services sector was seen as the shining light for the economy, but we found that small and medium sized services clients were underperforming, in comparison to previous years.
“With this in mind, in the three months leading to July, our business services clients performed significantly better and we have seen a period of steady growth.”
In the second quarter, business services stood at 94.9, an increase of over 14 points from Q1 performance which was 80.2. Despite good quarter-on-quarter growth, the sector has contracted between 2012 and 2013.
The Business Factors Index compiles its results based on the turnover activity of Bibby Financial Services’ UK clients, made up of small and medium sized businesses with a typical turnover of £1.5 million and ten employees, against a base point of 100.
Business services SMEs include recruitment and staffing businesses, security contractors and cleaning companies.
Tait says the report provides an indicative view of the sector, focusing on the type and size of businesses that make up the vast majority of enterprises in the UK. He says: “Our customers are a good indicator of the wider economy because of their industry spread and size. The Index for Q2 shows a period of solid growth among service focused SMEs using invoice finance, which is a vital platform for growth.”
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.
Tait believes business services performance has been largely driven by the recruitment industry and that results could point to a further reduction in unemployment figures later in the year: “Recruitment is a significant contributor to output in the UK and from our own discussions with these businesses we know that things are improving, which could lead to a further fall in unemployment later in the year.”
According to the Office for National Statistics unemployment fell by 4,000 to 2.51 million during the three months leading to June.
Roddy Donaldson, Managing Director of recruitment agency, Maxwell Bruce says: “We saw an improving second quarter when compared to Q1, with our turnover up 47% across that period and I’m feeling confident going into the second half of the year.
“There is a growing sense of business optimism out there and the recent summery weather should help our fortunes in Q3. However, managing costs continues to be important as some are starting to creep up again – not to pre-recession levels, but something we need to keep a close eye on.”
Quarterly and yearly comparison:
|
|
Q2 2013 |
Q1 2013 |
Q2 2012 |
|
Business services |
100 |
80.2 |
94.9 |
