Business Sentiment Index – overall score improves but mixed picture for some sectors
- Manufacturing & Engineering and Print & Packaging sectors experience rebound in confidence
- Transport & Haulage and Agriculture maintain positive momentum
- Construction and Services fall back after continued challenges for both sectors
Our Business Sentiment Index (BSI), which measures SME business confidence, has risen modestly for the third consecutive research period, continuing the upward trend seen in 2023.
The differences in fortune among various sectors also continued, with Manufacturing & Engineering, and Print & Packaging – in particular - seeing a rebound in sentiment, while Transport & Haulage and Agriculture maintained their upward trajectory.
With both sectors facing various headwinds, the Construction and Services sectors saw their BSI scores fall back for the first time since December 2022.
Appetite for investment
Firms’ appetite to invest dropped from 75% to 68% for those intending to seek funding for investment in the next 12 months.
All sectors saw a drop in sentiment in this marker – significant in some cases, as with Services (71% to 59%) – apart from Transport & Haulage, where the percentage of firms wanting to invest improved from 62% to 77%.
Missed opportunities
The number of companies that have missed business opportunities because of a lack of available funding continued to fall:
- 51% - December 2022
- 45% - May 2023
- 41% - September 2023
- 39% - January 2024
This latest figure is in line with the more normalised levels achieved for this question, last seen in May 2022, when 37% of respondents answered ‘yes’ to ‘have you missed a business opportunity in the last 12 months, due to lack of available finance?’.
At 41% (Sept 2023: 26%), Transport & Haulage saw the biggest difference in sentiment, when compared to the previous research period.
Economic outlook
Confidence in the macroeconomic outlook among SMEs has incrementally improved, achieving positivity for the first time in around two years, but it’s worth remembering that in November 2021, 75% of respondents were positive about the economy – by January 2024 this had reached just 46%, which in itself is an improvement.
There was no change between May 2023 and September 2023 in the cumulative result. The Construction sector saw the biggest swing to the positive with a 10% upward tick.
Predicted business performance
Reflecting the overall BSI result, predictions about future business performance rose slightly across the board, except in Construction and Services. What hasn’t changed is that most firms expect to continue treading water in 2024, with their prospects remaining unchanged.
Score calculation*
The BSI is based on the views of 907 business owners and senior members of the UK’s business community and calculated from data charting their:
- Appetite for investment in their business in the coming 12 months
- Access to finance and whether they’ve missed a business opportunity through lack of available finance
- Views about the UK’s economic outlook
- Thoughts on their likely performance in the coming 12 months
Our view
Matt Roper, CEO of Close Brothers’ Commercial business, said: “The recovery in confidence, albeit cautious, among the UK’s small and medium business owners continues, is clearly positive news.
“However, our research reinforces the feedback we’re getting from the stakeholders in our key sectors that the recovery in sentiment very much depends on which industry they operate in.
“Our commitment to the SME community is that we will continue to work with firms through the cycle, providing expert advice and building long-term relationships, as we’ve always done."
Methodology
*All figures, unless otherwise stated, are from a Censuswide survey conducted in January 2024. The survey canvassed the opinion of 911 SME owners across the UK and Ireland and across several industries on a range of issues affecting their businesses.
