Fightback at small firms continues

Small firms saw activity tick up again last month amid continued signs of recovery, according to figures published today.

The latest small business report from RBS showed output continued to recover in September. Picture: AFP/Getty Images.

However, the impact of lockdown measures on the hospitality sector held back progress and jobs are still being axed as firms look to cut costs.

The latest Royal Bank of Scotland (RBS) UK Small Business PMI report showed that a revival in consumer spending and a buoyant housing market helped drive increased activity for small firms in September. But with output still well below pre-pandemic levels, September saw the seventh straight monthly fall in employment. However, the pace of job cuts eased and smaller firms reported a slower rate of reductions than larger firms.

The headline small business activity index climbed from August's 50.6 to 51.8 in September. Any figure above 50 indicates an overall increase in business activity, but the latest expansion was still softer than the recent peak of activity seen in July (53.3).

Susan Fouquier, managing director of business banking in Scotland for RBS, said: “Despite a slowdown in activity in the leisure and hospitality sectors, September’s PMI data shows early signs of a steady recovery for the UK’s small businesses with an uptick in growth, demonstrating adaptability and resilience among this key segment of our economy.

"It’s encouraging to see that business outlook remains positive for the next year despite further restrictions coming down the track that we’ll continue to support businesses through.”

The report showed that service sector companies saw a modest rose in business activity overall with the first increase seen in inflows of new business since February. Business expectations for the next 12 months moderated slightly from August, however, with many respondents citing concerns about re-introduced lockdown measures, and some noting worries surrounding Brexit uncertainty.

Manufacturers recorded a further increase in output during September, although the rate of growth softened slightly on the month. A return to growth in order book volumes, the reopening of manufacturing supply chains and stock replenishment were all factors contributing to the steady rise in output levels.

September saw a third straight monthly improvement in activity at small UK construction firms, marking a sustained recovery in output levels following the record downturn during the second quarter.

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