Building on the GDP growth accurately forecast by the monitor, run by Cebr, in Q1 2013, the increase in confidence in Q2 2013 suggests the economy will grow by 0.6% this quarter.
Key findings for Q2 2013 show:
- The BCM Confidence Index stands at +16.7, the highest level since Q3 2010 and up from +12.8 in Q1 2013
- Plans for growth in business investment however remain weak at 1.7%, broadly in line with the latest Office for Budget Responsibility (OBR) forecast for 2013
- Confidence is positive in all regions in the UK, all sizes of businesses and across all sectors, including a marked increase in confidence in the construction sector
- Consumer spending is still under pressure due to a squeeze on earnings with an increase in salaries of just 0.9% in the last year
This quarter’s BCM also provides additional evidence that the recovery is strengthening. Expected profit growth continues to increase, domestic demand growth remains steady and there is a decline in businesses reporting higher than normal stock levels as customer demand increases.
Exports expected to improve
Despite the on-going problems in the eurozone and a slowdown in growth in China, exports are expected to grow by 4.0% in the next 12 months which would return the UK to pre-crisis levels of growth. Although not at the level Government would like, it is a positive step forward especially combined with an expected fall in input price inflation and a slowdown in commodity price increases.
Recruitment plans unchanged
Businesses recruitment plans remain broadly unchanged. Companies expect to increase employment by 1.3% in the next 12 months compared to a pre-crisis growth level of 1.8%. This does not translate though into higher average total salaries with pay expected to increase by 1.5% over the next year, despite staff turnover remaining a greater issue than in 2012.
Confidence continues to be positive across all sectors and regions
For the second quarter running, confidence is positive across all regions and sectors with Scotland and Yorkshire and Humber the most optimistic regions. There has been a sharp improvement in construction sector confidence which now stands at +22.7, compared to -8.1 in Q3 2012. The Banking, Finance and Insurance sector is the most confident at +30.1.
For the full report, please visit ICAEW’s website.