Sentiment among manufacturing firms continues to improve, Close Brothers Asset Finance reports

1 min read

The Close Brothers Asset Finance Business Sentiment Index (BSI), which measures SME business confidence, has risen modestly for the third consecutive research period, with the manufacturing sector maintaining its upward trajectory.

Appetite for investment

Manufacturing firms’ appetite to invest dipped significantly from a high of 81% in September 2023 to 69% in January 2024 as the UK economy continues to perform sluggishly and interest rates remain at their highest levels for some time.

Missed opportunities

The number of companies that have missed business opportunities because of a lack of available funding continued to fall and this latest figure is in line with the more normalised levels achieved for this question, last seen in May 2022.

At 40% (Sept 2023: 47%), the manufacturing sector’s responses are very much in line with that of the UK, as a whole.

Economic outlook

Confidence in the macroeconomic outlook among SMEs – including those in Manufacturing - has incrementally improved, achieving positivity for the first time in around two years, but it’s worth remembering that in November 2021, 75% of respondents were positive about the economy – by January 2024 this had reached just 46%, which is itself an improvement.

Predicted business performance

Reflecting the overall BSI result, predictions about future business performance rose slightly. What hasn’t changed is that most firms expect to continue treading water in 2024, with their prospects remaining unchanged.

Steve Gee, CEO of Close Brothers’ Industrial Equipment Division, said: “The recovery in confidence, albeit cautious, among the UK’s small and medium business owners continues, is clearly positive news.

“However, our research reinforces the feedback we’re getting from the stakeholders in our key sectors that the recovery in sentiment very much depends which industry they operate in.

“Our commitment to the SME community is that we will continue to work with firms through the cycle, providing expert advice and building long-term relationships, as we’ve always done."

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