The economy in the UK is showing further signs of recovery, results from the British Chambers of Commerce (BCC) Quarterly Economic Survey reveal today.
Over 7,400 businesses took part in the Q3 survey, which is published in advance of official figures and other private surveys. It is said to be the first economic indicator of the quarter and consistently mirrors trends in official data. It is also closely observed by policymakers such as the Treasury, the Bank of England and the Office of Budget Responsibility.
The survey shows that key areas in the UK’s manufacturing and services sectors are improving, with stronger balances in Q3 compared to Q2. Critical balances are said to be stronger now, than when compared to long-term historical averages.
Confidence in the manufacturing sector has appeared to have fuelled a boost in growth. Six key manufacturing balances have achieved all-time highs with home deliveries increasing by 38%; employment higher by 32%; employment expectations are up by 29%; cashflow has increased 22%); turnover confidence is now a further 66%; and the number of companies operating at full capacity is up by 46%.
Figures for business confidence in turnover and profitability are all above pre-recession levels, with manufacturing turnover and profitability reported as 66% and 46% respectively. Also, turnover and profitability for services is up 58% and 39% respectively.
The services sector has seen a rise in employment of 20% and is said to be the highest since 2007. Certain key services balances are still lower than pre-recession levels, however these figures show an improvement this quarter, with employment expectations up by 26%, cashflow increased 12%; investment balances were 17% higher for machinery and increased by 24% for training; while confidence in profitability confidence was raised by 39%.
These results have led the BCC to believe that GDP growth in Q3 could be around 0.9-1.0%.
Director General of the BCC, John Longworth, commented: “We have long-championed the idea that businesses up and down the country have remained confident about their abilities to grow. Even more firms now believe they can increase their turnover and sales, and hire more staff, which is a testament to their hard-work, creativity and ambition.”
Chief Economist at the BCC, David Kern, stated: “It’s clear that the UK upturn is gathering momentum, with most key balances in this quarter higher than their pre-recession levels in 2007. On the basis of these results, GDP growth in Q3 could well be around 0.9-1.0%, with our full-year forecasts for 2013 and 2014 likely to be revised up further. However these strong results must not lull us into a false sense of security.”