Business confidence grows in South West according to survey by Plymouth accountants Grant Thornton and ICAEW
BUSINESS confidence in the South West has perked up hugely from the same period a year ago, a new study reveals.
The new ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) reveals a positive confidence score for the second successive quarter and a huge swing from the same period a year ago when confidence hit a three-year low ahead of the double dip recession.
But the new Confidence Index shows a score of +8.2 in the South West, in contrast to the -18.4 score a year ago.
Key findings for Q1 2013 show steady growth in turnover and domestic sales, with increases over the past year of 2.9 per cent and 3.1 per cent respectively.
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This is broadly unchanged from a year ago, suggesting businesses have experienced relatively stable trading conditions.
However, the report says export growth in the South West has been generally slowing over the past year.
Companies do expect a 3.3 per cent annual increase in domestic sales, and they expect to increase staffing numbers by 1.3 per cent over the coming 12 months.
This headcount growth suggests private sector labour market conditions are set to improve slightly for the region's unemployed.
The unemployment rate in the region is just 5.5 per cent, well below the national average of 7.7 per cent.
But, despite reasonable business performance, earnings growth is expected to remain weak.
Total salaries rose by just 0.2 per cent during the past 12 months, and are projected to increase by just 1.3 per cent in 2013.
With consumer price inflation standing at 2.7 per cent last month, this wage growth remains below the cost of living and means an erosion of consumer spending power, the report said.
Jon Blake, regional director of the Institute of Chartered Accountants in England and Wales (ICAEW), said: "There was a risk that, combined with the traditional January blues, the bad weather and some high-profile job losses in the region, talk of a triple dip recession could become self-fulfilling.
"Low confidence a year ago translated into the job losses we've read about but confidence has remained steady in positive territory with companies expecting an increase in domestic sales in 2013."
John Golding, managing partner at accountancy firm Grant Thornton in the South West, which has its Plymouth base in Mayflower Street, said: "While no-one should be under any illusions about the scale of the challenges we face, it is hugely encouraging to see that for the second successive quarter, businesses in our region are feeling overwhelmingly positive about the economic outlook.
"Companies' modest plans for capital investment remain a worry however, as this is crucial to a strong and sustained recovery."