The Index has been charting the performance of BFS’s 4,000 UK clients since the start of the economic downturn in 2007, across five key sectors from a base point of 100.
The latest data, based on business turnover, reveals that the manufacturing sector has seen its highest levels of output for five years, as the quarterly average jumped to 122.8 from 114.2 in Q1, suggesting increased levels of confidence among firms and their customers.
Alongside the Business Factors Index, Bibby Financial Services also surveyed the outlook and attitude of 450 UK SME business owners.
More than half of manufacturing firms surveyed said they have seen orders on the rise, 55 per cent have seen lapsed customers returning, and 58 per cent have seen an increase in the number of enquiries they have received. The figures suggest the manufacturing sector continues to benefit from a weaker exchange rate.
The findings echo official statistics from the National Institute of Economic and Social Research, which also reported a rise in manufacturing activity in May.
However, the Business Factors Index report goes on to highlight a mixed picture in the sector revealing that despite the heightened output, manufacturing businesses are remaining grounded and are digging themselves in for the long-haul. Almost a third, 30 per cent, of companies believe the UK economy will not recover for another five years and as a result, 63 per cent of businesses are planning to cut costs and overheads to ensure their growth continues.
Edward Winterton, executive director at Bibby Financial Services, said the new data was encouraging, particularly as it is based on the turnover of our clients which are using invoice finance, evidently for growth.
He said: “The increase in activity of the manufacturing sector over the last five years has been staggering.
“By comparing what we are seeing among our own clients with the performance and outlook of SME owners more widely, it would appear that businesses in the manufacturing sector which are enjoying better results during this difficult time are those with a secure cash flow in place.
“A smooth cash flow will always be key to the success of a business and firms across the board need to be aware of the funding options available to help them achieve this.
“Although the sector is showing heightened output, manufacturing firms are ensuring their growth will continue by looking at their current funding options.”
