QES Q3 2024 - Business confidence in Humber shows slight uptick, but Budget fears increase
INFLATION fell to 12.7% in September, further raising hopes of an interest rate cut, which was hinted at by the Governor of the Bank of England, Andrew Bailey, when he joined Chamber Business Leaders for lunch in North East Lincolnshire at the beginning of October.
The full report and pictures from that event is on the Chamber’s website, but a good discussion was held over lunch, giving the Governor a useful insight into the challenges facing Humber businesses.
The Quarter 3 Survey, the first since the General Election on July 4th, saw a slight improvement in most sectors, giving a more positive picture of the local economy, with Home Sales and Orders leading the charge.
Home Orders improved by 19 points, but remained in negative territory at –19, while Home Sales improved by 15 points, however also remaining in negative territory with a balance figure of –13.
Other bright spots this quarter were an improvement in the number of firms planning to invest in plant and machinery which was up 26 points to a balance figure of +8,
Firms were also to looking to invest in training again, rising 23 points to a positive balance figure of 10.
Turnover expectations for the coming months also improved, rising by 20 points to a balance figure of 7, while profit expectations, despite climbing by 14 points remained firmly in negative territory with a balance figure of –23.
Exporters didn’t fare quite so well according to this quarter’s figures, with Export Sales down 33 points to –59 and Export Orders showing a similar fall of 37 points to a balance figure of –71.
The number of firms that have recruited staff in the last quarter was down slightly by two points to –2, but the number of firms planning to recruit showed an improvement, up 12 points to a balance figure of 26, which has to be encouraging.
Only 26 per cent of firms claimed to be working at full capacity, but fewer firms said they were planning to increase their prices, with the balance figure dropping 13 points to 37.
Recruitment and finding people with the right skills to fill Humber job roles was one of the themes of the discussions with the Bank of England Governor, and this quarter, 72 per cent of firms said they were having difficulty finding the right calibre of staff to fill their vacancies, with more firms, 63%, saying they had tried to recruit staff.
Of those who tried to recruit staff, 79% were looking for full time employees, but only 36% were for full time positions, which was 24 points down on the last quarter. 46% of respondents said they were looking to fill temporary roles, and 25% were seeking part-time staff.
Of the type of jobs being recruited for this quarter, 44% were looking for skilled manual people, up 19% on last quarter, and clerical workers were also in greater demand, up 15%.
The biggest price pressures this time around were finance, up 11 points, and raw material costs, up 5 points.
Inflation remained a concern, as did tax with Rachel Reeves’ first Budget pending.
The Chamber’s External Affairs Director, David Hooper, said: “The Quarter three figures showed a slightly improved picture over recent months, with a degree of confidence beginning to creep back into the survey results, with firms beginning to invest in recruitment, plant and equipment and training again.
However, the international sector is still challenged, and it is clear businesses are concerned about Chancellor Rachel Reeves’ first Budget later this month, and the effects it will have on business.
“However, following our successful business lunch with the Governor of the Bank of England where he hinted at an interest rate cut in November if inflation stayed under control, the recent announcement that it had dropped to 1.7%, the lowest for some time, that we will now see a modest trimming of the Bank rate in the next few weeks, and that will be welcome relief for businesses.”
Nationally, The British Chambers of Commerce said: “Our survey is a timely reminder of the real challenges businesses across our Chamber network are facing.
“With speculation rife about the tax impact of this month’s crucial Budget, businesses are clearly anxious. They understand the fiscal backdrop the Chancellor is facing and the need for the Government to address public finances. However, that must not be at the expense of investment and growth.
“While most firms are still expecting increased turnover over the next 12 months, confidence has dipped slightly. Sales and cashflow are also being hit, with the impact on manufacturers particularly concerning.
“Our message to Government is clear. Business stands ready to work in partnership to overcome challenges and help grow the economy. But an effective industrial strategy and a competitive tax landscape are essential to getting Britain booming again.”
