The turnover of UK SMEs increased by 20 points in September, despite widespread goods and materials shortages putting pressure on supply chains.
Bibby Financial Services’ (BFS) says the latest data from its SME Turnover Index suggests that wholesalers and manufacturers are gearing up for a busy Christmas period and anticipating further supply disruption by ordering in stock early.
The Index tracks the rise and fall of UK SME turnover and comes directly from the balance sheets of more than 2,000 BFS invoice finance clients. An increase in the headline index shows that SME turnover has grown.
The figures show that SME turnover is back above pre-pandemic levels year-on-year with the Index reporting 147 in September 2019, 152 in September 2020 and 165 in the latest numbers. However, optimism remains tempered with SMEs balancing the demand for new work with complex supply chain challenges and the end of many government support measures.
This growth in turnover can be seen most clearly in the wholesale sector, where the Index reading for the sector jumped by 35 points, from 174 to 209, with retailers gearing up for Christmas amongst widespread shortages and importing goods into the UK ahead of time. Manufacturing has also seen a jump from 147 in August to 160 in September.
Derek Ryan, UK managing director at BFS, said: “Christmas has come early for many SMEs in retail supply chains as the search for new suppliers ramps up ahead of what will be a disrupted holiday period. We always expect to see a seasonal boost in turnover in the run up to Christmas, but it is earlier and more pronounced than we’ve seen in many years. What’s more, the majority of clients and business advisors we are speaking to are increasingly bullish about economic activity across the next 12 months.
“The surge in turnover is more welcome news but comes with significant risks and is coming just as government safety nets are being withdrawn. With Covid-19 loan repayments now due, SMEs risk encountering significant strain on their cashflow particularly as they are now operating in the absence of furlough support and temporary insolvency measures. They are in danger of being left out on their own and it is vital they have the support in place to balance their funding needs accordingly.”