A fortnight ago, the Office for National Statistics (ONS) made a shock announcement. Our trade gap was narrowing and exports were leaving the UK in bulging pallets faster than air freight could carry them. This week the good news story unfolds further, with data from The Cashflow Barometer showing a 42% increase in export turnover in the last quarter.
The Cashflow Barometer is a quarterly indicator of the financial performance of UK small businesses. It is based on the analysis of 700 companies and does exactly what it says on the tin, measuring the influx (and efflux) of cash in the UK.
All the arrows are pointing upwards in this latest report. Not only is turnover skyrocketing, but customer numbers have also seen a boost. Exporting firms have added 17% more clients to their books in the past quarter; this means risk is diversified further across a varied customer base, and increased scope for upselling to a new buying demographic. The numbers are up a whopping 40% on the same quarter last year. Nice.
And these customers are even paying on time. The number of days outstanding for payment from export customers has decreased by 16% in the last quarter, an average fall of 11 days.
Things aren't too bad at home, either. Domestic turnover has increased 8% between Q2 and Q3 this year. But the lack of lucrative opportunities on home soil is just what's spurring the export boom. 'Tentative domestic performance appears to have created a real appetite for growth overseas,' says Peter Ewen, MD of Venture Finance, the invoice and asset-based lender behind the Cashflow Barometer. 'In the current economic climate, exports could be a vital revenue stream for businesses, reflected in the rising export turnover experienced across the last quarter.'
So, who's buying our wares? The report doesn't say. But last month's Credit Check Report suggests that most SMEs are targeting their efforts on emerging markets. A quarter (26%) of the accountants surveyed by the data-crunchers (also from Venture Finance) saw the greatest rise in overseas invoicing in the Far East, while others pinpointed central and eastern Europe as key hotspots (24%). Somewhat surprisingly, Europe is also still a good customer for Britain, with 27% of accountants sending their invoices to the continent.
Our manufacturing and engineering sectors are doing particularly well in this new, export-happy environment: turnover in these industries is up 8 and 3% respectively. Distribution business too are in the money: turnover has increased 11% between Q2 and Q3. But manufacturing firms aren't quite as successful at wooing the new customers. Their little back books are actually losing pages, with customers down 3% on the last quarter, falling by 12% across the whole year.
Nonetheless, it's a jolly bit of data on the same day that Moody's is threatening to downgrade the UK's credit rating due to 'weak growth' and a lacklustre recovery. As long as exports keep pouring out of the UK, and the cash keeps pouring in, our economy stands a fighting chance of hanging on to its triple A.