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SMEs enjoyed a strong start to 2006 as domestic demand picked up, confidence
improved and the end of the financial year encouraged customers to make
purchasing decisions, according to the PKF SME Index, a quarterly survey of 800
SMEs in the construction, manufacturing and service sectors.
Business output increased to 55.0 from 54.2 in the first quarter, and new
business orders rose to 55.2 from 54.0. Both of these are the highest scores for
18 months (where marks above 50 indicate expansion and marks below 50 indicate
contraction).
Anecdotal evidence from respondents suggests that customer activity is
increasing with numerous references to ‘major customer upturn’.
The manufacturing sector
Business activity in the manufacturing sector increased for the third
consecutive quarter with output up from 53.1 in the last quarter of 2005 to
54.2, the highest level since the second quarter of 2004.
The level of new business orders also rose to 53.7, the highest score since the
third quarter of 2004.
The three main factors identified by survey respondents for the uplift are
stronger domestic demand, more export orders and aggressive selling.
The service sector
Service sector output and new business growth also continued to accelerate to
their highest levels since the third quarter of 2004 at 55.9 and 57.0
respectively. Increased marketing and sales activity and a strong focus on new
business were the main reasons behind service companies’ good start to 2006.
Regional differences
Across the UK, the north recorded the strongest output growth, rising from 55.2
in the last quarter of 2005 to 55.6, just ahead of London & the south east at
55.3.
For the third consecutive quarter, all six UK regions recorded increasing
business activity.
New business orders also improved throughout the UK with the eastern region
scoring 57.6, its highest score since the end of 2003.
Employment prospects continue to be patchy with slight decreases in the north
(49.4) and the Midlands (48.9) but reasonably strong growth in London & the
south east (53.7) and the east (52.4).
PKF partner for growing business, Toby Stephenson, commented: “While all the
business condition indicators for the first quarter are heading in the right
direction for growing businesses, the spectre of rising energy costs is not
going to go away and the pressure to reduce energy costs and carbon emissions is
rising.
"Energy efficiency is something that all businesses should review on an ongoing
basis, continually seeking the most effective ways to curb the ever-increasing
burden on both their costs and the environment”.
Source:
Credit
Control Journal
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