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QES Q2 2023 - Business more positive, but firms remain cautious

THE general improvement in business sentiment we saw in the first quarter of 2023 has continued into quarter two, according to the latest results of the Chamber’s Quarterly Economic Survey of the Humber economy.

However, there is still a cautious tone, with firms keeping a tight control on costs as the highest interest rates we’ve seen for years combined with high energy costs and inflation are making their presence felt.

The inflationary pressures are leading to higher pay claims, with 79 per cent of firms highlighting that as a concern, double the number in the previous quarter, making higher pay settlements a key issue.

On a more positive note, raw materials costs have dropped slightly, down 11 points on the quarter one figures, the first drop seen in several months.

As the tougher economic conditions continue to bite, the number of firms which said they were planning to invest in plant and machinery dropped 18 points, to -3, while the number of firms planning to invest in training their staff also fell, down 2 points to 3.

Turnover expectations were also markedly down this quarter, with more firms saying they were expecting their turnover to fall, with the balance figure dropping sharply by 21 points to 3.

However, profit expectations  improved by 18 points this quarter, but while this was the third quarter in which the figure had improved, it still remained stubbornly in negative territory with a balance figure of –10.

Cashflow also improved slightly this quarter, continuing the improvement we have seen over the last four quarters, rising this time by 12 points but again remaining in negative territory at –7.

On the home front, Home Sales held their ground in the last three months, with a balance figure of 13 points, but Home Orders improved by 11 points, returning to positive territory with a balance figure of 3.

Export Sales also made a solid improvement, climbing by 42 points in the last quarter, but again remaining 31 points in negative territory, but these results hint at things moving in the right direction.

Export Orders were also up on the last quarter, improving by 6 points, but were down overall with a balance figure of –54.

Employment improved in the last three months, with a rise of 11 points to 16, while the number of companies which said they were planning to recruit in the next three months was fairly static, with an increase of 1 on the previous quarter, to a balance figure of 34.

Of the 53% of firms who said they had tried to recruit staff this quarter, management and skilled manual positions were the most difficult roles to fill, while full-time positions were also problematic.

While we’ve seen some improvements this quarter, only 37% of firms said they were working at full capacity.

The Chamber’s External Affairs Director, David Hooper, said: “While it is good to see the more positive sentiment we saw in the first quarter of the year continuing, there is still a clear note of caution being sounded by business in the Humber.

“Interest rates, inflation and energy costs are all having an effect, and the fact that fewer firms are willing to invest in new equipment or training is telling.

“Recruitment difficulties continue to be an issue as businesses struggle to find the right calibre of staff, something numerous firms repeatedly tell us at our regional Area Council meetings.

While cashflow has improved, turnover fell and profit expectations are some way off where they should be, so while businesses around the Humber are as resilient as ever, there is still plenty for their leaders to take into account.”

Click here to download the full report.

Pattesons Glass Ltd
Aa Global
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Hatfields Hull
East Riding of Yorkshire Council
Alan Boswell Insurance Brokers
Connexin Live, Hull
Andrew Jackson Solicitors LLP
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Streets Chartered Accountants
We are My
SPS Group
University of Hull
Wilkin Chapman LLP