Small business growth forecasts in manufacturing sector hit two-year low
Wednesday 12th July 2023
The percentage of small businesses in the manufacturing sector predicting growth for the next three months has fallen to 32%, dropping from 34% last quarter and 44% at the start of the year.
Looking back over time, the latest from Novuna Business Finance represent a two -year low, when in Q3 2021 29% of manufacturing small businesses predicted growth. Since then, confidence grew sharply through 2022 but for 2023 the percentage of small businesses predicting growth is falling.
Percentage of manufacturing small businesses predicting growth each quarter
2023 Q3 | 2023 Q2 | 2023 Q1 | 2022 Q4 | 2022 Q3 | 2022 Q2 | 2022 Q1 | 2021 Q4 | 2021 Q3 | 2021 Q2 | 2021 Q1 |
32% | 34% | 44% | 35% | 34% | 40% | 46% | 48% | 29% | 38% | 32% |
The findings are from Novuna Business Finance’s Business Barometer study, which has tracked small business growth forecasts every quarter for the last nine years. Whilst the national picture remains unchanged on previous quarters – with the percentage of small businesses predicting growth holding firm at 31% - the representative survey of 1,103 small business owners revealed significant divergence by sector, age and region. Manufacturing has traditionally fared well relative to other sectors, but this summer growth is more prominent elsewhere. The top sectors for growth this summer were Finance & Accounting (40%), Media (36%), IT/Telecoms (35%) and Transport and Distribution (35%).
Looking at other sectors where there were marked signs of improvement, the Novuna Business Finance data suggests the agriculture and hospitality sectors showed signs of much needed stability after a torrid time through the lockdown era. In agriculture, for the third consecutive quarter more than 30% of business owners predicted growth (31% for the current quarter) - a significant rise on the previous two years where the percentage of enterprises predicting growth ranged between 11-22%
In the hospitality sector, growth forecasts have also improved – up from 24% to 36% over the last six months. In the transport and distribution sector, growth forecasts hit an 18-month high at 35%.
Across the board, this summer sees a two-year high for the proportion of seasonal businesses predicting growth for the quarter ahead. The new tracking data from Novuna Business Finance reveals that 40% of small businesses that have a seasonal business model predict growth for this summer - a 25% rise on the start of the year and a favourable position compared to non-seasonal businesses, where growth forecasts have fallen for the fourth consecutive quarter.
Percentage of small businesses predicting growth each quarter by sector
2023 Q3 | 2023 Q2 | 2023 Q1 | 2022 Q4 | 2022 Q3 | 2022 Q2 | 2022 Q1 | |
Finance & Accounting | 40% | 46% | 41% | 40% | 44% | 39% | 35% |
Media | 36% | 38% | 45% | 48% | 36% | 38% | 52% |
IT / Telecoms | 35% | 44% | 42% | 40% | 44% | 40% | 40% |
Transport | 35% | 25% | 23% | 24% | 30% | 31% | 27% |
Hospitality | 34% | 38% | 24% | 26% | 31% | 41% | 29% |
Manufacturing | 32% | 34% | 44% | 35% | 34% | 40% | 46% |
Agriculture | 31% | 30% | 34% | 11% | 25% | 25% | 23% |
Retail | 27% | 31% | 28% | 28% | 20% | 25% | 23% |
Construction | 24% | 31% | 25% | 27% | 18% | 35% | 38% |
Real Estate | 24% | 15% | 29% | 27% | 32% | 29% | 36% |
At a time when the UK economy is in a relatively fragile position – impacted by inflation, the ongoing war in Ukraine and the pressure on living standards, our summer study shows a mixed position from the small business community, with enterprises in some regions and sectors struggling whilst, in others, growth forecasts are hitting 12 or 18-month peaks. Small businesses that rely on seasonal peak periods are leading the sector’s growth forecasts.
Small business confidence in the manufacturing sector showed signs of strong improvement last year, despite the testing market conditions and uncertainty. This year confidence has slipped, it may well be that the long-term impact of rising prices and supply chain disruption is now beginning to show.
Jo Morris
Head of Insight
Novuna Business Finance
Note to editors
The research was conducted by YouGov among a representative sample of 1,103 small business decision makers between 19 June and 2 July 2023, spanning all key industry sectors.