QES Q1 2021: Lockdown bites hard in Humber, but there’s optimism for better Quarter 2

THE first quarter of the year has been a tough one for firms in the Humber, but the outlook for the coming months seems brighter as the economy opens up again and a freshly vaccinated population ventures out for the first time in months and gets us back to business.

The results of the Chamber’s Quarter Four survey at the end of last year looked more promising after a difficult Quarter 3 and reflected a more positive business mood in the Humber, but as Lockdown 3.0 was announced on January 4th any progress made was put on hold again.

Quarter 1 of 2021 saw the nation back in lockdown and all non essential shops and retail were closed for the duration, only being allowed to reopen gradually towards the end of April.

The Quarter 1 survey, therefore, was taken under lockdown conditions in February and March, so we are hopeful that the unlocking of the economy will trigger a strong bounceback for many businesses, as widely predicted by the Bank of England’s economic forecast.

Chamber Chief Executive, Dr Ian Kelly, said: “It is encouraging to see some signs of optimism in the Humber as we emerge from the UK’s third lockdown.

“It has been a tough start to the year for many businesses, but we are looking forward now as the economy begins to reboot for a stronger second quarter.

“The vaccination programme in the UK has been a tremendous success and as we come out of lockdown, the innovative businesses we have here in the Humber will once again drive us forward.

“With lots of inward investment and exciting plans for renewable energy, carbon capture and our newly-bestowed Freeport status, the Humber is better placed than most to bounce back strongly and once again prosper.

 “The Chamber is also providing improved support for its members with five new advice lines included in our membership package covering HR, H&S, Legal, Tax and VAT issues.

“These are employer focused services backed up by unlimited access to experienced advisors and access to a library of 800 documents and templates for things like employment issues, furlough, redundancy or H&S requirements around Covid-19, risk assessments, H&S policies etc. Click here for more information.

The Q1 survey revealed that as businesses grappled with the after effects of Brexit in the Humber, Export Sales remained in negative territory, but did do slightly better than in the previous quarter, as did Export Orders, however both balance figures remained firmly negative.

Home Sales and Home Orders both fell back, with Home Sales dropping 13 points and Home Orders dropping a further 18 points, to -13 and -24 respectively.

Perhaps it is no surprise that employment opportunities were also on the back foot with many businesses in survival mode. Only 10%  were looking to increase their staffing levels, but 70% said they were holding steady, with the balance figure improving slightly from the previous quarter to -10.

Prospects for the next three months remain subdued, with only 13% of firms looking to increase their staffing levels.

Businesses said their Cashflow in the past three months had dropped, with a 34 point drop to -18, and investment in plant and machinery was also down on the previous quarter, dropping from a balance figure of -12 to -27 this time around.

Training was also hit during the lockdown period with a drop in the balance figure of 24, taking it from +6 to -18.

On a brighter note, turnover expectations for the coming months were up, rising by 15 points to +23, with profit expectations also showing an increase of 8 points to 10.

However, only 18 per cent of firms said they were working at full capacity this quarter.

More firms expected to see their costs rise, with the balance figure rising by 15 points to 38.

Raw material costs, finance and overheads were the biggest pressures on businesses this quarter, while Competition, Inflation and Tax were the biggest external concerns.

Click here to download the full report.