SMES optimistic despite dip in growth
Recovery in activity among small and medium- sized businesses stalled in August after a bounce in July but owners remain optimistic over longterm prospects, according to new data from Royal Bank of Scotland ( RBS).
I t s l a t e s t monthly s mall business purchasing managers’ index report showed the headline all- sector activity level slipped to 50.6, down from a two- year high of 53.3 in July.
It was only just above the 50 level that separates expansion from contraction. A lack of new work to replace completed projects and limited scope to meet customer demand were cited as contributing factors.
The study also identified a “disquieting” gap in performance between small enterprises and larger companies.
Job cuts in small businesses also continued, but the decline was the weakest seen for five months and slower than in larger enterprises. Small businesses cited cost reduction for redundancies, for example.
On a positive note, some small f i rms repor t ed staff returning from furlough and expressed optimism about the longer- term business outlook.
Susan Fouquier, managing of business banking at RBS, said: “Our data tells us that small businesses remain optimistic in their outlook for the longer- term, and it’s a positive sign that the rate of job cuts at this smaller end has eased over that of their larger competitors.
“However, small firms face different challenges to larger businesses, from supply chain issues to liquidity pressures, so this key part of our economy is not out of the woods yet.”