After accurately forecasting GDP growth of 0.6% in Q2 2013, the latest edition of the monitor, run by Cebr, is consistent with economic growth of 1.0% this quarter. Business expectations are positive for turnover, profits and job creation. Despite this, concerns still remain as capital investment remains stubbornly low.
Key findings for Q3 2013 show:
- The BCM Confidence Index stands at +24, up from +16.7 in Q2 2013; and at the highest level since Q2 2010
- The economy is expected to grow by 1.0% in Q3 2013 – this would represent the fastest economic growth since Q2 2010
- Businesses expect improvements in their turnover and profits for the next year, forecasting growth of 4.9% and 4.6% respectively
- Companies are looking ahead with plans to increase staff numbers by 1.6% in the next twelve months, while wages are expected to grow by 1.8%
- Confidence in the construction sector has rebounded strongly – an encouraging sign that the worst may be over for a sector hard hit by the economic downturn
- There are no signs however of an investment-led recovery with capital investment growth low and limited increase in exports expected
Confidence continues to be positive across all regions
For the third consecutive quarter, confidence is positive across all regions and sectors with the Northern England and Scotland the most optimistic regions standing at +35.9 and +32.5 respectively. Elsewhere, London continues to recover confidence following a period below the national average, with confidence for the capital at +27.2. Confidence in Wales has jumped by 11.1 and now stands above the national average at +26.6, representing the second largest increase in confidence behind Northern England (+16.2 increase).
Confidence in the construction sector, which now stands at +31.4, compared to +22.7 last quarter and -8.1 in Q3 2012, is at an all-time high. The government’s Help to Buy scheme has certainly helped to boost confidence in the ailing sector, but the improvements are markedly better than expected. With further infrastructure projects due to start in the near future, it’s important that construction is able to sustain this level of confidence.
Confidence in exports has remained steady despite a particularly challenging global environment which has seen parts of the eurozone continue to remain in recession and the Chinese economy slow down. Export growth is up standing at 3.4% and encouragingly businesses are expecting growth of 4.1% over the next year. But, while businesses are increasing their exports, we are not seeing the levels of growth needed to deliver a trade-led recovery.
For further information or to view the full report, please visit ICAEW’s website.