Manufacturing hits record highs in UK business confidence
Press Release – 16 August 2017
Manufacturing continues as the principle driving force behind business confidence in the UK, according to the latest results (Q2 2017) from the UK’s Credit Managers’ Index (CMI), the quarterly barometer from the Chartered Institute of Credit Management (CICM).
The 1.3-point rise experienced in manufacturing sees the Index close at 64.0, another all-time CMI high. The result also represents a year-on-year rise and the second successive quarter that the sector has improved. This suggests the positive effect that currency fluctuations are having on the UK’s exporting market since the Brexit referendum.
The CMI’s headline figure also closed up 0.9 points to finish at 60.1. This was primarily the result of a 0.8-point increase in the services sector, which closed up at 58.3.
The uplift follows Q1 2017’s decreases and shows the economy in much ruder health according to several key indicators such as GDP growth predominantly in Services, which rose 0.5%. Construction and Production were the two other indicators that slowed down, with decreases of 0.9% and 0.4% respectively. The headline figure has, however, now climbed to 60.1, broadly in line with the FTSE All Share market – the eighth time (and third successive quarterly result) in the CMI’s history that is above this threshold.
More positive news came from the unfavourable factors with six out of seven showing signs of improvement: Days Sales Outstanding (DSO) was +4.2 points higher (65.7); Insolvencies closed +5.1 points better off (55.9); Accounts Referred to third parties climbed by 5.1 points to 57.1
The CMI, sponsored by trade credit risk management experts Tinubu Square, is important because it gauges nationwide levels of credit being sought and granted by credit professionals across the UK and acts as a primary indicator of actual levels of business being conducted. It consistently maps the FTSE All Share Index and the EU Economic Sentiment Indicator.
The survey also reported that the markets continued to hold up with improvements in the FTSE All Share Index despite a dip in June, and overall a fairly low market volatility. In June, consumer confidence took a four point drop and was nine down on the same time last year.
Other findings indicated that companies were turning to dedicated software to help them reduce their risk exposure with 29% already using a software tool. A further 14% said that they believed it could reduce their risk significantly, but over a third still thought it would make little difference. In terms of where trade credit management systems could help credit managers, the majority felt that the most impact would be on reporting at 29% and business workflow at 22%, but only 7.5% thought that the most important feature would be its ability to connect with external systems.
Philip King, Chief Executive of the CICM, says the latest results provide further encouragement but progress is slow and steady rather than significant: “Despite Brexit negotiations continuing and no immediate outcome in sight, credit professionals are noticing a resilient economy across most sectors.
“That is not to say that this upturn will be necessarily long lasting – there are many potential pitfalls along the way as confidence remains fragile and the situation could easily take a turn for the worse at any stage. Caution is the watch word.”
Michael Feldwick, Head of Tinubu Square UK & NI, said: “It does seem that credit managers need to be cautious, so it is heartening to note that nearly a third of this quarter’s respondents are using dedicated software and finding that it reduces their risk significantly. In today’s uncertain times, this is clearly an avenue that more can turn to in order to manage credit and control their exposure to risk.”
The CMI’s results show a significant change in regional confidence too: Only the North East (45.0), Yorkshire and Humber (45.6) and Northern Ireland are the only regions to have dropped below the 48-point mark. The South East improved by 22% up to 63.3, while the West Midlands also showed signs of improvement closing up by 12% to 63.6.
The CMI’s also reports on 19 sector-specific with all but three meeting or exceeding the 52-point threshold – Oil & Gas down (48.0), Personal & Household Goods (51.7), and Insurance down (51.3), and the 10 others over 60 points.
The CMI is a diffusion Index, producing scores of between one and 100 (typically in a range of 40 – 60). Ten equally weighted factors are included – three favourable and seven unfavourable and the Index is calculated on a simple average of the 10 factors.
For further press information, please contact:
Sean Feast or Alex Simmons – Gravity Public Relations
0207 330 8810, email firstname.lastname@example.org
The Chartered Institute of Credit Management (CICM) is the largest recognised professional body in the world for the credit management community. Formed over 75 years ago, the Institute was granted its Royal Charter in 2014. Representing all areas of the credit and collections lifecycle, it is the trusted leader and expert in its field providing its members with support, resources, advice, and career development as well as a networking and interactive community. In addition to its comprehensive suite of qualifications and learning opportunities, events and magazine ‘Credit Management’, the CICM administers the Prompt Payment Code for BEIS. Independently, and through collaboration with business organisations, it provides vital advice to businesses of all sizes on how best to manage cashflow and credit.
Linkedin: CICM Credit Community