The Index also reports a reduction in market volatility with overall confidence and business growth in both the manufacturing and services sectors remaining high.
The 1.5-point rise experienced in manufacturing sees it close at 62.7, an all-time CMI high. The result also represents a 3.7-point year-on-year rise and the second successive quarter that the sector has improved. This indicates the positive effect that currency fluctuations are having on the UK’s exporting market since the Brexit referendum.
The CMI’s headline figure, however, has closed down 0.6 points to finish at 59.2. This was primarily the result of a 1.6-point reduction in the services sector, which closed down at 57.5. Despite decreasing, the results – which follow Q4 2016’s increases – are broadly flat. The headline figure, for example, remains above a 59.0-point threshold and marks only the seventh time (and second successive quarterly result) in the CMI’s history that is above this threshold.
The survey also found that, with the current uncertainties of global economics, almost half of respondents were using intelligence tools to identify risk against a strategy of extending credit terms to encourage growth. By comparison, only 9.4 per cent said that they were taking a conservative approach to credit management and reducing limits across the board. When asked if they were being more vigilant about credit management now than during the recession, 57 per cent said it was about the same, a third were more vigilant but 12 per cent thought the pressure had lessened.
Philip King, Chief Executive of the CICM, says the latest results are encouraging but warns against overconfidence: “Reducing financial volatility does not mean credit professionals should let their guards down and increased vigilance in credit and cashflow is of increasing importance,” he says. “This is especially so with negotiations for Brexit and the upcoming General Election, which could, and probably will, see increasing currency fluctuations that affect our businesses in a variety of different ways.
“Being unprepared for these fluctuations, particularly those that have international portfolios, could see businesses caught out and finding themselves in extremely difficult financial positions,” he adds.
Michael Feldwick, Head of UK and Ireland at Tinubu Square agrees: “The current economic climate is very uncertain and credit managers are clearly turning to technology to help them make informed choices based on current intelligence. This helps them not only to have a clear understanding of the actual economic landscape and how it might impact on their business processes, but to build vital agility into their everyday decision making process.”
