SME margins still in decline

Businesses are putting up their prices but their profits are still falling, finds research.


Businesses are putting up their prices but their profits are still falling, finds research.

Businesses are putting up their prices but their profits are still falling, finds a survey.

The overall profitability of companies in the consumer services sector fell in the past three months, with a balance of -14 per cent of respondents making less money, according to research from the Confederation of British Industry (CBI).

Firms expect profitability to drop further, with a balance of -26 per cent believing margins will decline in the next three months.

Businesses continued to raise prices for the third quarter in a row, with a balance of +19 per cent, but their costs also increased with a balance of +23 per cent.

Ian McCafferty, CBI chief economic advisor, says: ‘Although our recent retail surveys have shown increased sales of high street goods, this survey shows that households are still reluctant to spend on services. Conditions remain difficult for consumer facing firms as volumes of business have edged lower over the past quarter.’

In business and professional services, overall profitability fell with a balance of -29 per cent.

‘Firms selling to business and professional firms have seen their volumes move sideways over the past three quarters, and no growth is expected over the next three months. Unsurprisingly, business confidence in this sector has fallen for the first time in over a year,’ adds McCafferty.

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