Confidence returns to rural businesses says new research

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Rural businesses in the North are more confident and optimistic than they were three months ago according to the latest results from the CLA/Smiths Gore Rural Economy Index Quarter 2.

Earlier this year the Rural Economy Index for Quarter 1 2013 showed that there was a threat of further recession for the rural economy and, while not out of the woods, the most recent results indicate that there are early signs of recovery.

While farming businesses are still contending with the effects of the difficult weather conditions in 2012, they are a little more optimistic than they were in Quarter 1. Non-farming rural businesses are more positive than their agricultural counterparts. They are more confident about profitability over the next 12 months compared with farming businesses.

CLA North Regional Director Dorothy Fairburn said: “Quarter 1 was extremely negative and suggested the rural economy was heavily into recession following a winter far worse than anyone could have thought.

“However, we’re now seeing green shoots of recovery but they’re still fragile. The agricultural sector does look like it’s picking up again.”

Jason Beedell, Head of Research at Smiths Gore commented: “Confidence is critical for all businesses and is often an early indicator of profitability. Confidence influences investment and production intentions. Our analysis of projected business performance shows however that there is a marked difference in the expectations of agricultural and non-agricultural businesses; the greater optimism being expressed by non-farming businesses translates into expectations for higher sales.”

The investment expectations of non-agricultural businesses are now at their highest for over a year and while they expect to employ more people, the sentiment is expressed with a degree of caution.

Mr Beedell added: “There is evidence, albeit weak, that sentiment in the rural economy is on the cusp of change. There was tangible concern last quarter that there was a silent crisis taking place in the rural economy. With the Government claiming that UK high streets sales have been rising and UK factories witnessing the biggest boom in 20 years, there was a real concern that the rural economy was being forgotten.

“While there is a long way to go before agricultural and non-agricultural businesses can claim that the economic revival has leaked out into the country, we can be cautiously optimism.”