Small businesses are continuing to shed jobs this year although there are signs of a recovery, new research suggests.
A survey, conducted by HSBC and the Small Business Research Trust (SBRT), shows that a further three percent of firms are reducing their staff numbers.
In 2005, the majority of firms reduced their headcounts in three out of four of the year’s quarters.
However, this year there was an increase in investment in the first quarter of 2006 and slightly more firms increased their employment levels, the SBRT say.
But while the employment situation has marginally improved, 3% more firms report they are cutting back on jobs rather than increasing vacancies.
Only in the second quarter was there a small positive difference in recruitment over job losses.
There has been a growth in the number of firms reporting increasing sales, but so far this has yet to impact on the numbers employed by small businesses.
Mark Beresford-Smith, chief economist for the HSBC bank, said: “It is quite likely that smaller firms have had a harder time than their larger counterparts during recent months.
“But it is also clear that the economy's overall growth rate has been boosted to a significant extent by a build-up of inventories by manufacturers and distributors.
“These unsold goods are, obviously, not reflected in business turnover. In fact, during the first quarter spending by households, which is a key driver of demand for many smaller firms, rose in real terms by just 0.3%.”
© Crimson Business Ltd 2006
