Quarterly Economic Survey Q4 2017: Businesses feeling the post-Budget squeeze
FOLLOWING the Chancellor’s Budget in November and the first interest rate rise in 10 years which followed shortly after, businesses in the Humber are clearly feeling the pressure of a toughening marketplace, according to the Chamber’s economic survey results for the last quarter of 2017.
Research by the Hull & Humber Chamber of Commerce reveals that price pressures are having a more pronounced effect at the end of the year than at the beginning, with 35% of firms expressing concerns about interest rates and 52% (+9% on the last quarter) of companies worried about competition.
Companies also highlighted their concerns on tax issues, up 11% and inflation which was up two points, while business rates also rose seven points.
In the next three months 62% of businesses told us they expected prices to rise, up 23% on the third quarter, which saw the balance figure rise from 32 in Quarter 3 to 59 in Quarter 4, its highest level for two years.
At home, domestic sales were up, with the balance figure rising six points on the previous quarter, while Home Orders fell back slightly to 17 points, down one point.
Abroad, the balance figure for Export Sales was down four points to 29, while Export Orders, possibly reflecting the exchange rate, was up 14 points on last quarter, just two points shy of its highest level in 2017— 38 in the first quarter.
Set against the background of rising inflation, pay settlements were a growing concern for businesses, as was finance, with the balance figures rising by 14% and 20% respectively, although raw material costs were less of an issue this time around.
The employment figure for the last three months was also down in Quarter 3, dropping 11 points to 14, although more businesses were planning to increase their employment levels in the next three months, with the balance figure rising three points to 10.
There was positive news for those looking for work as the year drew to a close, with more permanent, full time jobs on offer. 20% more firms were looking for permanent staff, redressing a blip in the third quarter’s figures, while 88% of those jobs (up 8% on the last quarter) were full time positions.
Skilled manual jobs and unskilled or semi-skilled roles proved to be the hardest to fill in Quarter 4, while clerical and management vacancies were less difficult to recruit for.
Turnover expectations for the next 12 months showed a degree of positivity, with the balance figure rising 12 points to 48, while profit expectations also improved slightly, rising six per cent to 27. However, fewer firms were working at full capacity, with a figure of just 34%.
There was good news for those needing more training, with 17% of businesses planning to invest in training in the coming three months.
Commenting on the report, Chamber Chief Executive Dr Ian Kelly said: “The quarter point increase in interest rates which happened during the fieldwork period for this survey has highlighted the pressures businesses face as they adopt a cautious approach as we head into a New Year.
“However, we welcome the good news from the Government that the Brexit talks are moving into the next phase to secure a trade deal, along with positive economic noises from the USA and China which may help to restore important business confidence in the coming months.
“It’s good to see that Home Sales and Export Sales are still maintaining their positive numbers and companies may keep looking to invest more in training as we start 2018.
“Continued business investment, especially in training, is crucial to address the skills issues which are now affecting the UK, not just our part of the world here in the Humber.”
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