The UK manufacturing sector is driving business confidence and the outlook for growth, according to a new quarterly barometer.
The latest Chartered Institute of Credit Management (CICM) Credit Managers’ Index (CMI) for the first quarter of 2015, show renewed business confidence and an all-time index high, despite the uncertainty before the UK’s general election of May 7.
The CMI prompted 500 responses from credit managers in companies of various sizes broadly split by region, although slightly weighted to business in London and South east England. It 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.
The CMI, sponsored by Tinubu Square, gauges nationwide levels of credit being sought and granted by credit managers across both the manufacturing and services sectors, acting as a primary indicator of actual levels of business being conducted.
Alongside the index increase in manufacturing, which now stands at a record high (61.7), the services sector also closed up 0.8 to 59.5, contributing towards the headline index’s 1.3-point increase to 60.2. This represents a year-on-year (YoY) increase of 0.9, a significant uplift from the small decrease of 0.7 seen in Q414.
This quarter the survey also looked at the changing role of the credit manager, with 78% saying that their role and responsibilities had grown in recent years. Forty-one per cent said they not only had additional responsibilities, but were increasingly being called upon to make strategically important decisions.
To make time for this expanded role credit managers must work efficiently, yet tasks such as managing credit across multiple countries are only being successfully automated by just over half (57%) of respondents, meaning 43% do not have the adequate software to support them, while 30% still perform cross-country credit management as a manual task.
New credit applications have increased from the previous quarter, up by 4.2 to 66.4 – and this goes some way to cancelling out the drop in Q414 of 5.9. Despite this, credit sales have seen a 1.7 decrease on Q4 2014 to 69.4, representing a downward trend of three consecutive quarters.
Philip King, chief executive (CEO) of the CICM, said he was surprised that business confidence remained high against the background of an uncertain election: “Despite political uncertainty, the strength of the manufacturing industry has increased significantly, and this bodes well for the ongoing recovery.”
All 18 industry sectors reported good news in Q115, with industrial goods and services (60.1), and construction and materials (63.3) attracting the most attention, while notable performers were chemicals (68.8) and investments (70.0). The good news was also spread evenly across the regions, especially in the Midlands.
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