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Quarterly Economic Survey - Q4 2013

Fourth quarter results allude to an optimistic start for New Year.

FOLLOWING the City of Culture win and the Able Marine Energy Park announcement in December, the positive atmosphere in the region was reinforced by the final Quarterly Economic Survey of 2013 which revealed 67% of firms are expecting an increase in turnover, with export orders and sales performing consistently strongly.

The research, conducted by Hull & Humber Chamber of Commerce alludes to an optimistic start to the New Year.

Export sales and orders were both very strong again this quarter, rising to their highest levels since the survey began, with 78% of companies reporting a rise in export sales, 3% up on the Quarter 3 figure and consolidating the steady increase throughout 2013.

Export orders also performed impressively, with 80% of firms reporting an increase, again reaching the highest level since the survey began and recording a 9% increase on Quarter 3.

Firms expecting their turnover to increase in the coming months hit 67%, up from 53% in Q3 and 59% in Q2, making it the best result in this category for a couple of years, with the balance figure rising by 24 points on Q3 and nine points on Q2.

More firms expected their profits to remain the same at 35% than in the previous few quarters, but the balance still managed to show a 2 point rise.

Home sales increased this quarter by 6%, with home orders increasing 10% to its highest level since the survey began, beating Quarter 2’s 44% by a further 3% at 47%.

Employment prospects remained constant for 67% of firms, but the balance figure fell back two points on Quarter 3 but is still 3% better than the figures for the first two quarters. Expected employment also fell back three points to 19, but recruitment looks positive, with 67%, nearly matching the year high of 68% in Q2, saying they are recruiting.

The types of jobs firms are trying to fill makes interesting reading, with a sharp drop in part-time jobs from 22% to 12%. Full time vacancies rose by 10% to 88% and temporary jobs rose from 45% to 62% with both figures reaching new highs, while the number of permanent jobs fell to just 38%, the lowest figure ever recorded.

Yet 46% of firms reported recruitment difficulties, up by 16% on Q3, with management and skilled manual positions proving the most difficult positions to fill.

There was more good news on the cashflow front, with its balance of 2 returning to positive territory on the back of 27% of firms reporting an increase.

There was also something of a surge in firms increasing investment in plant and machinery, up 10%, with the balance of 29 being the strongest result in this sector since 2004.

Firms planning to invest in training also increased slightly, but the number of firms working at full capacity showed a slight increase from 34-35%.

Raw material costs were seen as the biggest pressure on prices, followed by pay settlements,

Inflation fears were leading the way in external concerns, followed by competition and tax, while interest rate worries also increased slightly, while exchange rates were now less of a concern.

The Chamber’s Chief Executive, Dr Ian Kelly, says:

“With the Able Marine Energy Park finally being given the go-ahead and the people and business community of Hull celebrating winning City of Culture for 2017, we made the transition into 2014 on a high.

“The results of our last Quarterly Economic Survey of 2013 also suggest a positive start for businesses in the New Year, with a relatively high proportion of firms expecting to increase their turnover this year.

“Export orders and sales are also performing very strongly, rising to their highest levels since the survey began. This boost in trade is reflected by the additional business the Chamber’s in-house International Trade Centre is doing, supported by its highly-skilled staff led by Pauline Wade and its five star rating from the British Chambers of Commerce.

“There was a notable increase in the number of businesses expecting their turnover to increase, showing consistent improvement in the latter part of 2013.

“A corresponding shift in the types of jobs firms are trying to fill will also be welcome news for the region’s jobseekers, although the high unemployment in our region is still a concern.

“With the economy continuing its encouragingly steady recovery, inflationary fears are raising their heads among our business leaders, as are concerns over interest rate rises, but we still believe the first of those increases to be some way off”.

Q4 2013 - Key QES results from Hull & Humber Chamber of Commerce

Sales and orders:

  • 47% of companies reported an increase in domestic sales, 6% up on the last quarter.
  • 22% reported a decrease, up 5%.
  • 47% increased their domestic orders, up 10% on Q3. 20% reported a decrease.
  • 78% increased their export sales, up 3%. 4% reported a decrease, a 2% rise on Q2.
  • 80% increased their export orders, up 9% on Q2. 4% reported a decrease.

For the next 3 months:

  • 27% of companies expect to increase their workforce, up 4%. 8% expect to decrease it, down 1%.
  • 25% companies expect to increase their prices, the same figure as the previous quarter. 6% expect to decrease them, down 8%.

In the last 3 months:

  • The proportion of businesses which recruited was 67%, an increase of 4% on Q3.
  • 27% reported an increase in cashflow, an increase of 7% on Q3, and 25% a decrease, down 2%.
  • 37% increased their investment plans for plant & machinery, up 10%. 37% increased their investment plans for training, up 2%.

For the next 12 months:

  • 67% expect to increase their turnover, a 14% increase on Q3; 8% expect it to decrease, an 10% drop on the last quarter.
  • 43% expect their profitability to improve, down 3%, 22% think it will worsen, down 5% on last quarter.

  • The cost of overheads was again the top pressure on prices (51%), followed by raw material costs (25%).
  • Inflation (55%), competition (29%), business rates (20%) and tax (31%) top businesses’ list of external concerns.

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