Quarterly Economic Survey Q1 2016: Strong policy support needed for steel, manufacturing and exports following difficult first quarter
“OVERALL, these figures highlight the vital importance of a strong policy framework to help key industrial sectors like steel, which are essential to our manufacturing and export base, especially at a time when our current account deficit is the worst it has been since 1948,” said Dr Ian Kelly, Chief Executive of the Hull & Humber Chamber of Commerce.
There was a marked slowdown in all the key indicators in the first quarter of 2016, with domestic sales and orders and exports both dipping significantly.
According to research by the Hull & Humber Chamber, the number of companies planning to invest in plant and machinery also fell sharply, with the balance figure dropping by a substantial 20% on the previous quarter, with fears of increasing foreign competition also becoming an issue for businesses in the Humber.
The forthcoming Referendum on Brexit is likely to be adding to an investment slowdown, with many businesses now holding off on investment decisions until the Brexit result is confirmed - one way, or another. However, The Chamber strongly welcomed the Chancellor’s decision in his recent budget to make significant changes to the business rates threshold. Dr Kelly pointed out that “this had become a substantial concern for many small to medium businesses in this area”.
In terms of this QES, the Home Sales balance fell 14 points to just five, its lowest level for some months, with around a third of firms reporting a slowdown. The Home Orders balance halved to 7 points compared to Quarter 4 of last year.
Exports Sales dropped 9 points, with the number of firms reporting an increase in sales falling by more than half compared to the last quarter. Export Orders also saw a big fall this time around, the with the balance figure dropping by 18 points.
There was a marked drop in the number of companies planning to invest in plant and machinery, with the balance falling by a considerable 20 points compared to the last quarter.
Cashflow also took a big hit, with nine per cent more firms reporting an increase in concerns which saw the balance figure dropping to -15.
Turnover expectations told a similar story, with fewer firms expecting turnover to increase and more firms saying they expected their profits to worsen, leading to a balance figure of just 2, which is a noticeable shift from the previous quarter’s figure of 37.
Firms are also predicting it will be more difficult to make a profit in the next three months, with 11 per cent more firms expecting profits to fall, with the balance figure dropping from 38 points to just 2.
Pay settlement worries led to the biggest surge in concerns over price pressures, with an increase of 15% to 31, while finance costs and other overheads were also predicted to rise.
All reinforcing the view of more difficult trading conditions in the Humber to come.
