NatWest’s SME Growth Tracker published today shows that service providers, from hospitality and leisure to transport and professional services, have experienced an uplift in the number of jobs available.
The Growth Tracker monitors the performance of small and medium-sized enterprises (SMEs), tracking business activity, future activity, employment, outstanding business, and pricing across the private sector.
SME service providers reported a further increase in payroll numbers, scoring 52.1 on the employment index in September, up from 51.4 in August. A reading of over 50.0 indicates growth, while a reading under 50.0 suggests contraction. Results show that the pace of job creation in September was slightly faster than the long-run average, with new hires typically being brought in to support firms’ growth plans.
However, the quarterly tracker also showed a renewed downturn in services activity among SMEs, with the business activity index score reducing from 50.1 at the end of the previous quarter to 48.6 in September. Survey respondents cited weak consumer demand and caution from clients ahead of the Autumn Budget.
The tracker also demonstrates that SME service providers are experiencing heightened cost pressures, with input costs rising sharply in September. This was reportedly mainly driven by higher staff wages due to the increased cost-of-living, with some firms also noting increased raw material prices. However, the overall rate of cost inflation remained softer than on average in the first half of 2024.
David Scott, Head of Consumer Industries, NatWest, said:
“Consumers have been hit by three years of disposable income erosion and continued price rises, causing them to reprioritise spending. This has impacted the services industry, which spans sectors such as hotels and restaurants, transport, recreational and sporting activities, as well as financial services including insurance and pension funding. Despite this, the entrepreneurial nature of services operators has seen ongoing investment in staff and sustainable initiatives, and stronger pipelines of new work indicate optimism in the sector.”
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