Small businesses in the manufacturing and construction sectors fared better than those in services as firms with between one and 49 employees recorded a slower overall decline in activity in June than in May, writes Ian McConnell.

The experience of small businesses is revealed in a survey published yesterday by Royal Bank of Scotland, with these firms recording an overall fall in staffing for a fourth straight month in June amid the coronavirus crisis.

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Royal Bank said: “Small firms indicated that persistently low workloads and fragile confidence meant that employment trends were highly subdued in June. There were some reports citing a return of essential employees from furlough, but the overall trend was a drop in staffing numbers for the fourth month in a row.”

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The bank’s small business activity index, which plummeted to 14.6 in April, rose from 26.3 in May to 42.5 in June on a seasonally adjusted basis to signal a sharp deceleration in the pace of decline.

Small businesses’ confidence about the prospects for future activity picked up in June but was weak by historical standards.

Royal Bank chief economist Sebastian Burnside said: “Small businesses across the UK have taken an important stride along the long road to recovery."