Quarterly Economic Survey Q2 2019: Turnover, profits drop as exports do better in Humber
THE Chamber’s economic survey results for the second quarter of 2019 have shown a modest recovery in foreign trade, while the home markets remain subdued and businesses are concerned about raw material costs, competition and tax.
The Hull & Humber Chamber of Commerce’s research also showed profit expectations took a tumble but business are expecting their prices to stay the same, suggesting they are absorbing an increase in raw material costs, the increasing price of which is reported to be a growing concern.
On the plus side, interest rates and the rate of inflation were less of a worry this quarter, but other overheads were proving to be a continuing challenge.
In the last three months cashflow had improved somewhat, with the balance figure rising to 18 points, staying in positive territory after six months in the doldrums.
However, the number of businesses planning to invest in training dropped by just over half when compared to the last two quarters.
Similarly the number of firms which are planning to invest in plant and machinery in the next three months also fell further into negative territory, dropping 10 points on the last quarter to –7, the lowest it has been for a year.
Domestic sales recovered slightly, up by nine points on the last quarter with a balance figure of nine, but this is still some way below the figures reported in quarters three and four of last year, which recorded balance figures of 24 and 25 respectively.
Home orders meanwhile fell back into negative territory with a balance figure of –3 this time, compared to nine in quarter two and zero in quarter 4 of 2018, so there is little confidence in this sector.
On the exports side, export sales rose by 12 points to a balance figure of 22, with export orders mirroring those figures, suggesting businesses in the Humber are just getting on with business for the time being.
The balance figure for employment in the last three months was also up this time around, almost double the figure reported in the first quarter of the year, but employment prospects for the next three months weren’t quite as rosy, with the balance figure dropping by nine points to 20.
Of the those businesses which said they had tried to recruit staff this quarter, Skilled Manual and Management positions were once again the most difficult to fill, and by some margin, reflecting the skills shortage we face in the Humber.
Fewer than half of the companies which responded (45%) said they were working at full capacity which suggests there is plenty of uncertainty and slack in the market which it now seems is unlikely to be resolved before the end of October at the earliest.
Chamber Chief Executive, Dr Ian Kelly, said: “It was good to see cashflow improve and some relief for the import and export sectors in the second quarter of 2019, but it is clear the rest of the economy is struggling to make much headway.
“The uncertainty facing businesses and the economy is now causing all sorts of problems and we need to see a resolution to Brexit, one way or the other, as well as an early spending review and a “Budget for business” to restore investment along with wider momentum and confidence.”
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