The quarterly business barometer by Hitachi Capital Business Finance reveals that financial services has the greatest proportion of businesses predicting growth with the lowest proportion in transport.

The poll asked 1,213 SME decision-makers what their business outlook was for the three-month period to the start of April 2017 and which regions offer potential business opportunities over the next 12 months.

Financial services had the most positive outlook, with 56% predicting growth, while financial/accounting and manufacturing were the second most positive with 41%.

The sectors predicting the greatest decline were retail, where 17% of respondents said business was falling, followed closely by media at 16%.

Construction, an important barometer of UK growth prospects, offered a positive outlook, with 32% predicting growth compared to 11% expecting decline.

More than half (56%) in construction predicted no change, one of three sectors where more than 50% suggested business would be static, along with transport and distribution (62%) and agriculture.

The manufacturing sector was one of the top three for net growth expectations, based on the proportion expecting growth minus the proportion expecting decline, with 40% overall. This compared to net growth expectations of 36% for the same period in 2016.

The research suggests that businesses are confident, despite the expected upheaval of the UK’s Brexit negotiations, which will start when Article 50 is triggered on March 29.

SMEs in the manufacturing sector expected most growth to come from within the UK, but one-third said it would come from mainland Europe and an equal number expected the US and Canada to drive growth.

Gavin Wraith-Carter, managing director at Hitachi Capital Business Finance, said: “SMEs have the ability to adapt quickly when required and what we are seeing overall – whether or not this reflects their own political beliefs – is a drive to make the best of any outcome to the Brexit situation.

“While the EU market remains key to manufacturing SMEs’ potential for growth, those offered by other markets – particularly if new deals are struck with Australia, the US, Canada and so on – have a new significance, which is hinted at in these results.”

SME business outlook for Q1

SectorNet growth Net decline Overall expectation 
Financial Services 56%  4% 52% 
Finance & Accounting 51%  9%  42% 
Manufacturing 49%  9%  40% 
Education 45%  9%  36% 
Media 45%  16%  29% 
IT & Telecoms 43%  12%  31% 
Real Estate 42%  7%  35% 
Medical & health services 39%  13%  26% 
Hospitality & leisure 39%  9%  30% 
Retail 34%  17%  17% 
Construction 32%  11%  21% 
Agriculture 31%  15%  16% 
Transport & distribution 22%  16%  6% 

Sample: 1,213 UK SMEs

Source: Hitachi Capital Business Finance

SME growth markets - manufacturing

sme growth markets 

Proportion of manufacturing SMEs expecting growth to come from each market

Source: Hitachi Capital Business Finance