Small business confidence plummets to three-year low in UK manufacturing
The percentage of manufacturing small businesses that predict growth has fallen to its lowest level for three years (23% in Q4 2020). New data from Novuna Business Finance reveals that only 24% of small business owners in the manufacturing sector predict growth for the months ahead, representing a quarter-on-quarter fall through 2023.
Percentage of small businesses predicting growth in the manufacturing sector
Q4 2023 – 24%
Q3 2023 – 32%
Q2 2023 – 34%
Q1 2023 – 44%
At a time when the CBI has reported that UK manufacturers have seen the biggest fall in orders since January 2021, the new nationally representative poll of 1,107 small business owners by Novuna Business Finance signposts a number of sectors where small businesses will finish 2023 with growth forecasts in decline.
Construction was another sector where the percentage of small businesses predicting growth (21%) has fallen to its lowest level since Q3 2022 (18%).
Percentage of small businesses predicting growth in the construction sector
Q4 2023 – 21%
Q3 2023 – 24%
Q2 2023 – 31%
Q1 2023 – 25%
Growth forecasts in the media and marketing sector have also hit their lowest level since Q3 2020. The percentage of small businesses predicting growth for Q4 2023 has fallen to 28% – with growth forecasts falling in consecutive quarters throughout 2023.
Percentage of small businesses predicting growth in the media and marketing sector
Q4 2023 – 28%
Q3 2023 – 36%
Q2 2023 – 38%
Q1 2023 – 45%
2023 ends well for IT, transport and retail sectors
Set against the challenges in the manufacturing, construction and media sectors, small businesses in three sectors are set to finish 2023 on a high. Following the adverse impact of lockdown and the cost-of-living crisis on the high street, small business owners in the retail sector are bullish about growth outlook going into the Christmas countdown period. Nationally, 33% of retail small businesses predict growth for the next three months – with growth predictions at the highest level since January 2021 (41%).
For small businesses in the transport and distribution sector, the percentage of business owners predicting growth has hit a 12-month high (38%), with quarter-on-quarter rises in growth forecasts recorded through the course of the year.
Percentage of small businesses predicting growth in the retail sector
Q4 2023 – 38%
Q3 2023 – 35%
Q2 2023 – 25%
Q1 2023 – 23%
In IT and telecoms, growth forecasts soared to 50% (up from 35% last quarter) – reaching the highest level in the sector since January 2018.
Small businesses in agriculture and hospitality hold firm
After a gruelling few years – when seasonal businesses in agriculture and hospitality have had to cope with the successive impacts of Brexit, Covid and the cost-of-living crisis – 2023 has been a year of much-needed stability for small business owners. In the hospitality sector, 35% of small business owners predict growth – the third consecutive quarter when growth forecasts have stayed in the mid-thirties.
In the agricultural sector, the percentage of small business owners predicting growth fell slightly on last quarter (from 31% to 26%), but 2023 as a whole has been a year of strong and more consistent outlook than the previous two years. Significantly, given the seasonality of agricultural small businesses (and with growth outlook typically dipping during Q4), the growth picture for 2023 shows significant improvement on the final months of previous years.
Percentage of small businesses predicting growth in the agricultural sector
Q4 2023 – 26%
Q4 2022 – 11%
Q4 2021 – 12%
Q4 2020 -16%
Jo Morris, head of insight at Novuna Business Finance comments: “The sector focus of our Business Barometer study, together with the quarterly tracking of key topics, has brought to light some important insights as we look back on 2023. Nationally, the percentage of small businesses predicting growth has stayed at 32% for the last three quarters, and from this data one might naturally assume that the small business community presents a picture of uniform confidence and stability. In contrast, when one takes a deeper look at the situation by sector, there are widely diverging trends. In some sectors, 2023 has been a milestone year of record growth, whilst in other sectors small business owners have struggled with quarter-on-quarter decline – something which is of great concern. Between these two groups, there are some historically troubled sectors for whom a position of hard-fought stability is, itself, a big step forward on previous years.”
“In the coming weeks, further research from our Business Barometer study will help us understand why some sectors are blossoming and why others have struggled for much of the year. At Novuna Business Finance we are committed to supporting established enterprises that are working on strategies to transform and grow to fulfil their potential, despite the enormously challenging context.”