Patchy signs on growth emerge

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The Independent Online
Conflicting views of the prospects for growth will emerge today, underlining a patchy economic recovery. Figures from the Confederation of British Industry show a fall in business optimism and the weakest trend in new orders for over three years. A survey conducted by SBC Warburg, by contrast, points to a more than doubled balance of companies expecting business conditions to improve over the next 12 months.

The Warburg survey, which questioned senior directors of quoted companies mainly with a market value of up to pounds 320m, said smaller companies had become more confident over the past six months, with optimism over growth, orders and margins all increasing. That brought to an end a persistent decline in confidence since February 1994, with consumer goods and services currently much more upbeat than general industrial companies.

Those findings were at odds with those of the CBI's small and medium enterprises survey, which warned that the overall outlook was far from encouraging. Tony Bonner, chairman of the CBI's small and medium enterprise council, said: "The picture is not at all rosy with total new orders at their lowest for just over three years and this is matched by a further decline of business optimism."

He added: "Our survey shows that small and medium enterprises now expect stronger growth in demand and output but this is by no means a foregone conclusion as similar expectations have been dashed over the past year."

The more optimistic Warburg poll showed increasing expectations of a consumer led recovery with over one in five consumer businesses now reporting that they expected it to become easier to secure orders over the next three months than currently.

Conditions for service companies were also reported to be at their strongest for over a year. The outlook for margins has recovered strongly and on balance one in four companies expect to increase their workforce.

Darren Winder, UK economist at SBC Warburg, said: "The growth rate of the UK economy clearly slowed last year but there are strong grounds for thinking that the level of economic activity will accelerate over the next 12 to 18 months. Even in general industrials, the relatively depressed level of business optimism now appears to be on an improving trend."

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