Member Article

Report reveals brighter times ahead

Private sector growth expectations in the UK have improved for spring 2011, with both manufacturers and service providers reporting stronger forecasts for business activity during the next twelve months.

Preview UK data from the forthcoming Global Business Outlook survey, compiled by research firm Markit Economics on behalf of KPMG, reveals that expectations for output growth in the UK manufacturing sector are the highest since data were first collected in June 2002.

Service providers meanwhile anticipate the strongest expansion of business activity since April 2007.

The survey also highlights improved expectations for service sector jobs growth since the previous survey in October 2010. Inflationary pressures are however set to intensify over the coming year as higher energy and raw material prices filter through to firms and consumers.

The percentage of service sector respondents anticipating an increase in business activity is 57%, versus 12% expecting a fall.

The resulting net balance is the highest in the past nine outlook surveys at +44.8%. In the manufacturing sector, 68 percent of respondents forecast growth of activity, against 8% predicting a decline, leading to a record high net balance of +60.4.

Employment expectations have also strengthened in the service sector, to the highest since April 2007, with a net balance of +23.2% of companies planning to add extra staff over the coming year. Manufacturers also plan to recruit additional workers (net balance +19.8 percent) although the forecast rate of job creation has slipped slightly to the lowest since October 2009.

Commenting on the latest survey findings, Mick Thompson, KPMG’s Newcastle Office senior partner, said: “This national data supports regional indications that businesses appear to be preparing themselves for growth.

“Although recovery is by no means yet assured, there are enough positive signs that businesses should be planning for better times – or risk being left behind when they take hold.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .