Small business concerns ease over energy and utility costs

The price of fuel and utilities remain among the most-cited cost drivers for small businesses but concerns are not as severe as they were a year ago according to the latest data from the Federation of Small Businesses (FSB).

While fuel costs are still a worry for just over half of small firms, that’s a substantial step down from the nearly 70% who were concerned during Q4 2011. It’s similar for utilities with just under 45% of small businesses now seeing them as a major cost pressure compared with almost 60%, just three months ago.

FSB’s commentary, contained in their ‘Voice of Small Business’ report for Q3 2012, is that price inflation for energy, utilities and other production inputs are starting to fall for many firms, a move they say is ‘providing some breathing space for margins in what are expected to be challenging months ahead’.

They do add, however, that highly energy-intensive transport firms and car-related businesses remain among the least optimistic parts of the economy.

“Oil prices seem to defy the gravitational pull of falling global trade growth,” it says, acknowledging that worries about military conflict between Iran and Israel are “pushing up the cost of this crucial energy source, resulting in high pump and gas prices for consumers”.

One FSB explanation for energy and utility costs starting to take more of a back seat in small business thinking, is that anxieties are currently focused on the poor state of the domestic economy and the difficulty of securing credit. It also says that, with fuel and utility costs having been high for some time, fewer firms are tending to identify them as large current cost drivers.

The ‘Voice of Small Business’ report is based on 2,584 responses, equivalent to 40% of FSB’s membership.

edie staff

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