QES Q1 2023 - Humber businesses more optimistic about year ahead
The Governor of the Bank of England Andrew Bailey says he now expects interest rates to drop in the coming months. He's pictured here (third from left) at the Chamber's Business Breakfast with (from left) Craig Simpson, Mike Whitehead and Dr Kelly.
BUSINESSES in our region adopted a more optimistic tone in the first quarter of 2023 than we have seen for many months, according to the latest Quarterly Economic Survey results from the Hull & Humber Chamber of Commerce.
After months of soaring inflation and rising interest rates which saw businesses battening down their hatches to survive the economic storm, they now seem more prepared to stick their heads above the parapet as those storm clouds begin to lift, but it’s still far from plain sailing for many!
Businesses had encouraging news on their domestic Sales and Orders, with both sectors showing an uplift in the first part of this year. Home Sales saw the balance figure climb back into positive territory, up by 26 points to 13, while Home Orders improved by 19 points, but the balance figure was still negative at –8.
In the Quarter 1 survey, a third of firms said they are expecting their turnover to improve in the next 12 months, with the balance figure rising from –9 in Quarter 4 of 2022 to 24 points in this quarter.
Profit expectations are also headed in the right direction again, but remained in negative territory, with the balance figure rising from -55 to -28 points.
Twelve per cent more of the firms which took part also said they were now working at full capacity, although 55 per cent were not.
Set amidst hopes that inflation has just about peaked, slightly fewer businesses said they expected prices to rise in the next three months, with the balance figure dropping six per cent to 57.
However, there were still many things concerning businesses as they head into the second quarter of the year. The biggest of these were raw material costs, with more firms expressing concern than in the previous quarter. Finance was also a key concern, while pay settlements was less of an issue this quarter, as were other overheads.
Tax proved to be the biggest external concern for companies in this quarter, more businesses were concerned about interest rates and business rates, while only 64 per cent of firms saw inflation as a major worry.
Competition and exchange rates saw little change in this quarter.
The employment figures also made encouraging reading with 38 per cent of firms saying they were planning to look for new staff in the next three months, with the balance figure climbing to 33 points.
In the last quarter there was an increase in the number of firms who were looking to recruit staff, with 40 per cent of respondents looking to fill permanent positions, although 18 per cent fewer firms said they looking to fill full time roles. Fewer firms were trying to recruit for part time or temporary jobs.
Export Sales and Orders were both less buoyant this quarter with both balance figures dropping considerably.
The Chamber’s External Affairs Director, David Hooper, said: “This set of survey results are the most positive we have seen for some time in terms of business optimism for the next 12 months, but there is still plenty to concern companies on the economic front.
“Cashflow is still a challenge for some, and there is little investment in staff training, although the manufacturing sector is looking more confident with more firms investing in plant and machinery in the last quarter.
“With hopes of improved turnover and profit expectations for the next 12 months, we may be entering a new period of growth, however, staffing issues are still a major concern for Humber firms, a view reinforced by the Chamber’s Area Council meetings where staffing issues are always a hot topic in our State of Trade round-ups.”
