QES Q1 2022 - Rapidly rising costs turn up heat on Humber businesses
THE Hull & Humber Chamber’s Quarterly Economic Survey results for the first quarter of 2022 saw Humber business fairing slightly better than they had towards the end of 2021, but rapidly rising costs and their effect on prices and profits were clearly a growing concern.
Research by Hull & Humber Chamber revealed that pressure on prices was a major worry for business as rising interest rates to combat inflation, increasing raw material costs, pay settlements and finance costs were all adding up to a fairly torrid time for firms, as the war in Ukraine may yet add more challenges to the business environment and its supply chains
Nationally, the British Chambers of Commerce QES results for Q1 2022 – the UK’s largest independent survey of business sentiment and a leading indicator of UK GDP growth – shows inflationary pressures on firms reaching levels never previously recorded in its 33-year history.
The Governor of the Bank of England, Andrew Bailey, will certainly have a lot to discuss when he joins us on Friday, April 8, at the Mercure Hull Grange Park Hotel to talk to Humber businesses.
The economic survey’s Quarter 1 results showed that Home Sales and Home Orders were doing better than in the previous quarter, with Home Sales showing the strongest climb, up 30 points, while Home Orders were up 12 points.
The export sector was also up, with Export Sales rising 28 points in the last three months, with Export Orders also up, by a strong 22 points.
Employment in the last three months also bounced back strongly in the first quarter, with a balance figure climbing back into positive territory with an increase of 61 points to +13.
Cashflow in the last three months was also a major concern for businesses, with the balance figure dropping by a huge 60 points to –4.
Perhaps unsurprisingly firm’s Profit Expectations for the next 12 months also faired badly in Quarter 1, dropping 11 points to –9.
The survey also confirms that widely predicted price rises are also on the way with 78% of firms saying they were expecting to have to increase their prices in the next 12 months. The balance figure rose 20 points, while only 59% of firms reported working at full capacity
The Chamber’s External Affairs Director, David Hooper, said: “These results for the first quarter of 2022 are quite stark and demonstrate that businesses are under increasing pressure from almost every direction at the moment.
“Steep increases in energy prices are headline news and are a major concern for business as rising interest rates, inflation, raw material costs, pay settlements and finance costs are all adding up to a fairly torrid time for firms”.
“To help its members as much as possible, the Chamber has invested in its membership offer which now includes five new advice lines 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, redundancy or H&S requirements around Covid-19, risk assessments, H&S policies etc. Click here for more information.
The Chamber’s Quarter 1 Survey also revealed that in the next three months, the expected employment figure dropped by 10 points, from 36 points in the last quarter of 2021, to a balance figure of 26 for the first quarter of this year.
The number of firms which are still investing in training rose by seven points to a balance figure of 22.
Despite the prevalent gloom and concern, firms were continuing to invest in training their staff in the last quarter, with the balance figure rising by 7 points to 22.
Access to finance was more of an issue in the last quarter too, with 8% more firms airing their concerns.
Exchange rates, however, were less of a concern this time around, with only 2% more firms citing this as an issue, 6% of firms raised increasing business rates as a worry.
