Business confidence at highest level for 7 years
There are also signs that trading improvements seen by businesses since the start of the year will be further embedded in the months ahead as they increase investment levels, according to the bank’s Business Monitor survey.
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Hide AdDonald MacRae, chief economist at the Bank of Scotland, said: “Expectations for 2014 are at their highest level since mid-2007, suggesting the recovery will continue throughout 2014 and will become increasingly embedded. An increase in investment by firms would further enhance the recovery.”
The survey gathers data about business trends, market conditions and financial factors each quarter using a questionnaire completed by around 400 businesses. It shows that in the three months to the end of February, 41 per cent of firms surveyed increased turnover, 36 per cent experienced static turnover, and 23 per cent experienced a decrease.
The figures represent an improvement on the previous quarter – and a substantial improvement on the same quarter a year ago. Volumes of repeat business also remained at high levels in the period, having risen strongly in the previous quarter.
Export activity plunged downwards at the end of the year 2013, but recovery is now evident with a balance of more than a third predicting a rise in activity in the next six months. Firms’ assessments of their immediate prospects in the next six months swung upwards and downwards in 2012, but have been on a rising trend throughout 2013.
The latest distributive trades survey published by the CBI yesterday also showed shops are expecting the later timing of Mother’s Day and Easter to drive a sales bounce-back over the next month after a disappointing March.
A poll of 106 firms found that 36 per cent of retailers overall said sales volumes in the year to March were higher, while 23 per cent said they were down, giving a balance of 13 per cent.
In a sign that conditions are set to improve markedly, a balance of 36 per cent of those surveyed believe sales will rise next month, in the highest expected growth rate since December 2010.
Barry Williams, chair of the CBI distributive trades survey panel and Asda’s chief merchandising officer for food, said: “The pace of growth has slowed, likely in part down to the later timing of Mother’s Day and Easter this year.
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Hide Ad“Conversely, this is the same reason many retailers are looking forward to more robust growth next month.”
The hard-hit grocery sector saw sales growth increase at the slowest pace for four months, while department stores and other non-specialised retailers saw sales fall, the CBI said.
Supermarkets have reported difficult trading conditions in recent months as cost-conscious consumers turn to discount chains and rein in their spending.
Sainsbury’s last week revealed it broke a nine-year run of underlying sales growth in the quarter to 15 March, with like-for-like sales excluding fuel dropping by 3.1 per cent. Other retailers have also been impacted by consumer belt-tightening, with Majestic Wine last week warning that annual profits will be flat after it underestimated the hangover in consumer spending following the festive celebrations.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Consumers are currently being relatively careful in their spending. They seem prepared to spend for specific reasons – such as for Christmas and to take advantage of the clearance sales - but then are inclined to take a breather afterwards.”
He added: “The encouraging news for retailers is that consumers’ purchasing power should pick up over the coming months with inflation remaining muted and earnings growth accelerating.”