SME recovery flatlines as shortages hamper turnover for second consecutive month
SME turnover fell for the second consecutive month (although marginally) in August as labour and skills shortages continued to hamper economic activity. With restrictions now eased across the UK and the economy gearing up for the Christmas period, this latest data from the Bibby Financial Services’ (BFS) SME Turnover Index suggests the summer boom may already be over.
The Index tracks the rise and fall of UK SME turnover and comes directly from the balance sheet of more than two thousand BFS Invoice Finance clients. An increase in the headline index shows that SME turnover has grown and vice versa. The data is indexed against January 2016.
Lucile Knight, Chief Strategic Development Officer at BFS, commented: “A large proportion of SMEs are being affected by supply and staff shortages across multiple sectors. Disruption was predicted long before the pandemic began, as any post-Brexit relationship with Europe would take a period of adjustment and the pandemic just made those challenges more acute. A sizeable number of our own clients have warned that shortages are going to have an impact on their growth.
“As we adapt to life in a post-lockdown UK, SMEs are having to modify their business models to accommodate new behaviours and transformed trading conditions. While SMEs in the service sector are greatly benefiting from receding Covid restrictions, the manufacturing and construction sectors are among those struggling, resulting in the overall flatlining we are now seeing. SMEs should be wary of further uncertainty and challenges such as rising inflation. Building flexibility into their planning for the coming months will be critical, specifically regarding how and where they can access the necessary funding support and counsel to be able to respond accordingly.”
This modest fall in turnover is most clearly reflected in the manufacturing sector, where SME sector turnover also fell by one point on the Index, to 147 from 148, continuing a decline from June when the industry posted a score of 152.
However, turnover across other sectors saw more significant fluctuations. Construction SMEs saw a 7% rise, posting a score of 192 in August, up from 184 in July. This partially offset the fall from June, where the Index was as high as 217, with the industry displaying resilience in the face of the supply chain disruption and labour shortages.