Wholesale industry improving after 'turbulent' year, says Bibby

The performance of the wholesale industry has improved in the last three months, and has stabilised after a turbulent start to the year resulting in improved attitudes of businesses, especially smaller firms, according to the Bibby Financial Services Business Factors Index.

The increase in optimism is a reflection that wholesale has now become the third-best performing sector in the UK. It also appears that the industry is beginning to recover from the bad weather the UK experienced at the start of the year, which had a dampening effect on the performance and trading levels of wholesale firms.

The Index reveals that businesses in the wholesale sector have experienced an increase in activity in the last quarter - the average index reading for Q2 is 98.90 up from 90.57 in the first quarter.

Despite these promising signs, there is still evidence that this optimism is not held by all within the wholesale industry, and the Index shows that there is still some caution regarding when the recovery may occur:

· It appears that larger wholesale firms (those with a turnover of more than £1m) are not as optimistic as their smaller counterparts. Only 14% said that their business is doing well, the majority opting for a more neutral outlook. 46% stated that conditions are stable but they remain hopeful for the future - a fair reflection of the sector's output in the Index

· In terms of the future, there remains an air of uncertainty with the majority of all businesses in the sector predicting it will be at least another year before signs of recover occur

· However, a fifth (21%) of all wholesale businesses think the recovery could take three years or more

Edward Rimmer, UK chief executive at Bibby Financial Services said: "It is encouraging to see the wholesale industry has been able to build on the optimism from the previous quarter with more stable levels of output throughout Q2.

"In the current economic climate there is good reason to remain cautious, but the figures from this quarter are up significantly on the same period a year ago and there is a strong sense of moving forward.

"The key to achieving growth is building now for Christmas and putting in place the foundations to ensure maximum profits are obtained.

"Wholesale firms must begin building their inventories now to make sure finances are in place to prevent a funding bottleneck when dealing with an increase in orders.

"To do this, there must be robust credit control processes in place, and it can often be difficult to access finance. As such, Bibby Financial Services remains committed to supporting businesses in this sector throughout 2010. "

The Business Factors Index, compiled by specialist invoice finance provider Bibby Financial Services, tracks movements in small business turnover.

For the first time since the start of the report in October 2009, the Business Factors Index also includes qualitative data from a number of the UK's large organisations - those with a turnover of £1m or more.

The trends derived from this data, which goes back to July 2007, have been collated alongside the results of a series of interviews conducted with more than 500 business owners, from a range of businesses across the UK, to produce a comprehensive overview of how UK firms are faring in the current climate.

The Business Factor Index is issued by Bibby Financial Services and is available online at www.bibbyfinancialservices.com.

Source: Bibby

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