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Chamber warns of strategic and economic perils facing Humber region in 2016 - Quarterly Economic Survey

BUSINESSES across the Humber performed noticeably better than their counterparts across the UK over the last quarter, certainly in terms of the home market.

This reflects several good news stories locally, from Hull City of Culture, to Flemingate in Beverley, as well as progress in renewables on both banks of the Humber with Siemens’ and Dong’s investments in particular.

However, in manufacturing and exports, alarm bells are ringing. China’s slowdown is impacting on global trade generally and its dumping of steel into UK and European markets is causing intense problems locally as we see at Tata Steel in Scunthorpe.

Chamber Chief Executive, Dr Ian Kelly, says: “The Government must redouble its efforts to help ensure a level playing field for UK manufacturing via an active industry policy for the likes of the steel and chemicals industries in which this area is strongly represented.

“This is a must to ensure the Humber can play its full role in making the Northern Powerhouse initiative a reality on this side of the Pennines, across the North South divide and in the lop-sided balance between services and manufacturing”.

He went on to stress: “As we enter the New Year, we strongly endorse Chancellor George Osborne’s view that UK debt must continue to be brought down, even and especially in the difficult global conditions we face in 2016.

“Essential strategic decisions affecting business are also likely to be made this year. On Devolution, keeping the Hull and Humber City Region and its “Energy Estuary” together are absolutely vital, as is getting the very best deal possible for the UK in determining our future relationship with the rest of Europe.

“Understanding the economic consequences of managing these issues badly and not listening to business views enough, is something the Government and politicians generally have to be most careful about in 2016”. 

Our Quarterly Economic Survey said . . .

RESEARCH by the Hull & Humber Chamber of Commerce showed home sales and orders finished 2015 on a positive note in the last quarter of the year, recovering some lost ground, having seen a big downward change in the third quarter. The balance figure for Home Sales rise by 8 points to 19, but that is still some way off the Quarter 2 balance of 31 points.

Home Orders followed a similar trend, rising by 10 points, but was also still down on the Quarter 2 balance of 19, which in turn was down on the 38 point balance of the first quarter.

However, export sales and orders moved into the doldrums, despite 31% of firms reporting an increase in orders. The difference arose through more firms reporting a decrease in sales, with fewer firms staying at a constant level, which led to the overall balance figure dropping by a total of 14 points.

The Export Orders balance also dropped by 8 points to -8, again attributable to more firms reporting a decrease in orders, despite a slight increase in orders for some exporters.

There was a noticeable drop in the number of companies airing concerns about possible changes to interest rates, down by almost a half on the previous period. Exchange rates were also slightly less of a concern, as were Business Rates, Inflation, Competition and taxation.

Cashflow made a noticeable improvement, bouncing back into positive territory with a balance of eight points, contrasting positively with Quarter 3’s balance figure of -16 points.

Plant and Machinery investment plans were down, possibly reflecting the slowdown in the run-up to the festive season, with more firms cutting back their plans to buy new equipment for their businesses.

Turnover expectations improved slightly, with the balance rising by 2 points to 37, but is still some way below the balances of Quarters 1 and 2, at 41 and 44 points respectively.

In the last three months, only 16 per cent of firms had increased their workforce, this was a drop on the third quarter’s figure of 28%, but 68% of firms had kept their workforce at a constant level, with only 4 per cent more firms in Q3 reporting a decrease.

In the next three months, 29% of firms are expecting their workforce to increase, up 1% on Q3, with 18% expecting to see a decrease in staffing levels, up 6%, with just over half of companies expecting to see their workforce remaining constant.

Of the 54% who said they recruited staff, the largest number of vacancies were for full time and permanent positions, (75%), while 24% were for part-time roles, and 25% were for temporary positions. 46% of respondents said they hadn’t tried to recruit staff.

Management and skilled manual jobs were again the hardest positions to fill, while only 10% said they had difficulty recruiting unskilled or semi-skilled people.

The biggest pressures on prices this time around were on overheads, although fewer businesses were concerned about pay settlements. There was a rise in worries over raw material costs, with twice as many firms reporting concerns than last time around, although access to finance now seems to be much less of an issue.

So with home sales going up, but set against a backdrop of tough global markets, the New Year begins on a positive note locally but facing strategic and economic perils going into 2016 if Government gets key decisions wrong on Devolution and Europe. 

QES Report - Q4 2015

 

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Associated British Ports
University of Hull
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