Confidence levels among businesses in the transport & storage sector increased in Q3 2010 while the outlook across the whole economy weakened, states the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).
According to BCM, which tracks the confidence levels of UK finance and business professionals, in Q3 2010, 65% of those in the transport and storage sector are more confident in the economic prospects facing their organisation over the next 12 months, compared to the previous 12 months. Only 12% are less confident about the coming year. This is a somewhat more positive picture for the sector than last quarter (Q2) when 59% stated they were more confident and 20% that they were less confident. Across all sectors this quarter, 54% are more confident and 19% less confident.
Optimism among businesses in the transport and storage industry may well be holding up as they stand to gain most from a strong export market thanks to the relatively weak sterling. This is despite a decline in UK business confidence overall, driven by larger service sectors such as retail, business services and banking, finance & insurance.
The transport & storage sector recorded a Confidence Index* of 29.0 points in Q3 2010 up marginally from 23.4 points in Q2 2010, while the national Index fell from 25.5 in Q2 2010 to 21.5 this quarter.
The transport & storage businesses surveyed report marginal growth in turnover (0.3%) and gross profits (0.8%) over the last 12 months, with somewhat more robust growth forecast for the year ahead. However at 4.0% and 3.0% respectively, the forecasts for growth in turnover and profits remain below levels typically seen before the recession. Prices also saw a slight increase of 0.9% over the last 12 months, with a modest 1.4% rise expected over the coming year.
Will McWilliams, Head of Transport at Grant Thornton said: "The transport sector seems to be holding up better than others due to a slight increase in overseas orders and growing demand from foreign customers.
"However, with the Government's October spending review expected to cut transport spending, we could see confidence in the sector decline somewhat for the next quarter and beyond. Reducing carbon emissions within the transport industry is also a priority and although necessary, policies around this might prove costly for businesses in the sector, thus impacting on levels of overall confidence."