North West small business confidence falls this quarter but remains in positive territory, says the Federation of Small Business (FSB).
The North West Small Business Index (NWSBI), which measures confidence amongst businesses, has fallen from the read taken in Q1, 2021. It currently stands at 21% in Q2, whereas 3 months ago confidence was higher at 39%.
However, as the last 12 months has been polarising from one quarter to another, sentiment in the region now remains positive in 2021. Despite a slight fall in business confidence for the next three months (currently at 21% for Q2 2021, falling from 39% at Q1 2021), it does appear the relaxation of regulation continues to be contributing to optimism in the region.
Encouragingly the number of businesses reporting increased profits rose significantly in the last three months (40%) – the last time that small businesses in the region were asked about profit (Q4, 2020) only 21% reported growth. In addition for the first time since before the pandemic, the number of businesses increasing headcount (23%) is greater than those reducing headcount (12%). Investment intentions for the North West also remain positive going into Q3, with 37% looking to increase the amount of capital being invested in their business (net 22%). Investment intentions in the North West are the most positive across the UK.
Despite these positives business still have barriers to growth with the general economic conditions in the UK (48%), appropriately skilled staff (36%), consumer demand (33%) and labour costs (31%) are the greatest perceived barriers to growth over the coming twelve months.
Paul Wareham, FSB England Policy Unit Representative North West said: “The latest North West results have built on the positive outlook of many small businesses. This optimism follows a difficult period for many, who have been closed for up to fifteen months, with the majority now open for business”.
“Small business confidence remains in positive territory, however that confidence is down on the first quarter results, perhaps indicative of businesses realising that recovery could be a long process for them. Pleasingly, profitability sees a positive score for the first time in many quarters, with a net balance of businesses looking forward with optimism to revenues and margins returning to something resembling ‘normal’”.
“A net balance of small businesses expect to take on more staff this coming quarter and we also see positivity when it comes to investment and growth intentions. With a view to barriers to progress, North West businesses report skills and recruitment difficulties, the general economic climate and uncertain consumer demand as the main areas of concern”.
