New survey shows growth in activity for SMES in July

The latest data from the Royal Bank of Scotland small business PMI, has shown a pick-up in activity at UK small businesses.

While the data is in a further sign of operating conditions gradually improving following the lifting of lockdown measures, the pace of recovery remained uneven and lagged behind that seen among larger companies.

July’s data shows small companies in the service sector experienced a modest overall increase in business activity, while UK manufacturers with fewer than 49 employees recorded their strongest growth in business activity for just over six years at the start of the third quarter.

The monthly index, designed to monitor the performance of private sector enterprises, showed five times more of the UK’S small businesses reported growth in July (36%) than in April (7%).

At the same time, the number of small firms registering a decline in business activity was 28% in July, an improvement from 39% in June and down by more than half from the peak of 78% in April.

At the same time, the number of small firms registering a decline in business activity was 28% in July, an improvement from 39% in June and down by more than half from the peak of 78% in April.

Susan Fouquier, managing director of business banking Scotland at the Royal Bank of Scotland, said: “Seeing growth of activity in small businesses in the latest Royal Bank of Scotland UK Small Business PMI is a positive sign of recovery but, overall, the data is still showing smaller enterprises are lagging behind the activity seen among larger companies”.

July data showed small firms faced strong and above-average cost increases.

Pressures on this front remained especially acute in the construction and manufacturing sectors, linked in part to supply-chain disruption and rising transport costs.

Service providers also noted a jump in operating expenses from recent lows, which they partly attributed to staff returning from furlough.

Looking to the future, small enterprises were more optimistic about the outlook for activity over the next 12 months in July.

With many still operating below full capacity, workforce numbers continued to fall.

However, the decline in employment eased.