More confidence in non-agricultural rural businesses

CLA President Harry Cotterell said: "The outlook from the latest REI is positive for non-agricultural businesses.

"However, 55% of rural businesses that use lending report that borrowing rates have worsened, which of course could slow their economic recovery.

"In contrast, confidence and sales in the agricultural sector are significantly down on the start of this year due to adverse weather conditions."

Rupert Clark of Smiths Gore said: "There has been a shift in the market with a fall in sales and profitability for many farming businesses because dreadful weather during 2012 affected the harvest and caused difficulties for next year’s crops.

"If the weather in 2013 improves, we expect to see an increase in agricultural confidence as the underlying market fundamentals, of price and demand, are strong."

Looking at rural businesses excluding agriculture in Quarter 3, 45% reported higher sales over the past six months – up from 31% in the previous quarter; 56% reported higher business optimism for the next 12 months – up from just 20% in the previous quarter, and 48%predicted higher profitability over the next 12 months – up from 26% in the previous quarter.

Despite the rural economy showing signs of recovery, the impact of this year’s bad weather on agriculture was plain to see in the figures from Quarter 3, with 47% of agricultural business predicting a drop in profitability over the next 12 months – up from 28% in the previous quarter; 21% reported lower sales over the past six months – up from 12% in the previous quarter; and 31% expected to make a lower investment in their business over the next 12 months – up from 20% in the previous quarter.

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