Quarterly Economic Survery - Q2 2015
Steady progress, but future looks uncertain
STEADY progress was reported by businesses in the Humber region over the last quarter, according to the Chamber’s Economic Survey results for the second quarter of 2015.
The exports sector’s peaks and troughs of recent months seem to have settled a little as businesses move towards the middle of the year, according to research by the Hull & Humber Chamber of Commerce, with 57% of firms reporting export sales remained constant in the last three months, There was a similar number of firms reporting a steadying of export orders, at 59%.
There was little change on the home sales and orders front, with 41% of firms reporting stable trading conditions on Home Sales, with the balance figure rising three points, while Home Orders saw 45% of firms’ order books holding steady, with fewer firms expecting an increase. The Home Orders balance figure dropped to 19 points.
Recruitment issues, a hot topic for businesses across the Humber, was again highlighted in this quarter’s survey results, with 64 per cent of firms reporting difficulties in finding the right calibre of staff to fill vacancies. 58% said they had difficulty in recruiting suitable candidates for management positions, while those struggling to fill clerical positions rose from 15% to 26%. Unskilled and semi-skilled rose from 10% last quarter to 19% this time around, although skilled manual vacancies were easier to fill, with 26% of firms saying they had difficulties finding suitable recruits, down from 35% last quarter. On a more positive note, most of the vacancies were for full-time permanent jobs.
Fewer firms expect to recruit new staff in the next three months, with 69% planning to keep staffing levels as they are, with only 26% planning to recruit, down from 35% last quarter. Only 6% of firms said they expected their workforce to decrease, taking the balance figure to 20 points, down 5 points on the last quarter.
More firms expected their cashflow to increase, with a rise of 15%, with the balance figure rising 10 points, back into positive territory this quarter, at 13.
More firms expected their turnover to remain constant in the next three months, this increase coming from a drop in the number of companies expecting their turnover to drop. This combination saw the balance figure rise by a modest three points to 44.
However, the balance figure for expected profit for the next 12 months fell by 11 points. This is because fewer firms expect things to improve, and there was a slight increase in the number of businesses which expected their profits to worsen, but more firms expected a consistent level, with that figure rising by 5%.
Eight per cent more firms said they were working at full capacity this quarter.
The number of firms planning to invest in new plant and machinery fell slightly, down 2% with the balance figure dropping to 23, down six points on the previous quarter.
Plans for putting money into training took a bit of a hit this quarter, with 12% fewer firms planning to invest in training for staff than in the previous three months.
Fewer firms expected their prices to increase with 69% expecting to see them remain constant. This was due to reduced pressure from pay settlements, although concerns over raw material costs were up 5% and other overheads by 6% last quarter, but concerns on finance costs were the same as in the first quarter of the year at 19%.
The Chamber’s Chief Executive, Dr Ian Kelly, says:
“The Humber saw steady progress in business activity over the past three months but an uncertain future seems likely as the international crisis affecting Greece continues and the impact of the autumn spending cuts by Government shapes local policymakers’ thinking.
“These are uncertain times, especially for exporters and manufacturers, who have broadly been performing well in the Humber.
“Hopefully Germany and Greece will be able to find the right compromise over the coming period which will give certainty and confidence to business and allow the recovery to continue locally as well as nationally and internationally”.
Q2 2015 - Key QES results from Hull & Humber Chamber of Commerce
Sales and orders:
- 45% of companies reported an increase in domestic sales, 2% down on the last quarter.
- 14% reported a decrease, down 5%.
- 37% saw their domestic orders increase, down 10 points. 18% reported a decrease.
- 58% increased their export sales. 8% reported a decrease.
For the next 3 months:
- 30% of companies expect to increase their workforce, up 1%. 6% expect to decrease it, down 3% on the last quarter.
- 24% of companies expect to increase their prices, down 10% on the last quarter. 7% expect to decrease them, up 4%.
In the last 3 months:
- The proportion of businesses which recruited was 61%, up 4%.
- 35% reported an increase in cashflow and 22% a decrease, down 1%.
- 33% increased their investment plans for plant & machinery, down 2%. 31% of respondents increased their investment plans for training, down 12%.
For the next 12 months:
- 57% expect to increase their turnover, down 2%; 13% expect it to decrease, down 5% on the last quarter.
- 45% expect their profitability to improve, 21% think it will worsen, up 3 points on the last quarter.
- Overheads were the biggest concern this time around (+39%), followed by raw material costs (22%) finance (19%) and other pay settlements (15%).
- Inflation (44%), exchange rates (20%) business rates (17%), and competition (13%) top businesses’ list of external concerns.
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