Quarterly Economic Survey - Q3 2015

HOME sales saw the most significant change in the third quarter of 2015, with the balance figure dropping by almost two-thirds compared to the last quarter, its lowest level since Quarter One of 2013, but 12% more companies also said their sales and bookings were holding steady.

According to research by the Hull & Humber Chamber of Commerce, home orders also saw a slowdown in the last quarter, with the balance figure for the sector dropping from 19 points in Quarter 2 to just four points this time around. Again there was a also rise in the number firms reporting constant trading conditions, which was up eight points to 53%.

The export sector improved slightly in the third quarter of the year, 61% of firms reporting steady trading conditions, up from 57% in the last quarter.

Export orders was a similar picture, with 59%, the same as in Quarter 2, reporting a steady level of orders, but with only 3% of firms reporting an increase.

In recruitment, 60% of firms said their staffing levels had remained the same in the last quarter, with only two per cent of firms having taken on new employees, while only three per cent reporting their staffing levels had decreased.

However, in the next three months, six per cent more firms expected to see their staffing levels decrease, while only two per cent thought they would increase. This saw the balance figure drop to 16 points, its lowest level this year.

However, with 67% of respondents having tried to recruit staff in the last three months, it’s still a positive picture, but 79% of jobs were being for full-time roles and 69% of jobs being permanent positions. 21 per cent of jobs were part-time, and 31% temporary.

The figure for the number of firms finding difficulty in recruiting staff was broadly similar to the last quarter at 61% down from 64% in Quarter two, although there were fewer difficulties filling management roles, with an 18% drop to 40% raising such concerns. Clerical roles were less of an issue this time around, although 2% more firms were having trouble finding skilled manual positions.

The last three months saw a drop in the number of firms reporting an increase in their cashflow, with a drop of 22%, but 57%, up 14% on the previous quarter, said their cashflow had remained constant, although 7% more firms had seen a decrease.

The balance figure for the number of firms planning to invest in new plant and machinery in the last three months has also dropped slightly, but looking back to previous quarters, its fairly constant—58% this time, and 56% in Q2.

There was a slight increase in companies planning to invest in training, 60%, up nine points on the Q2 figure of 51%, with the balance figure rising 5 points to 18.

Turnover expectations took a bit of a hit, with the balance figure dropping to its lowest level since the third quarter of 2013 at 35, but Profit expectations made a modest improvement, with 52% of firms expecting to see an improvement, up seven points.

Fewer firms were working at full capacity, down 20 points at 32%, while 69% of firms thought their prices would be remain the same.

The big price pressures reported were pay settlements and other overheads. There was a drop in the number of firms concerned about raw material or finance costs, while the main external concerns were over interest rates and competition.  

The Chamber’s Chief Executive, Dr Ian Kelly, says:

“Following market uncertainty in China and as the Government’s autumn spending review draws ever closer with deep cuts expected, perhaps it’s no surprise to see business taking a slightly more cautious stance.

“Exports in the Humber region are, however, still ahead of other parts of the UK which is good news after a difficult second quarter.

“It’s also good to see recruitment improving slightly, which is maybe reflecting a more positive mood around the Humber with renewables activity now progressing nicely”.  

 Q3 2015 - Key QES results from Hull & Humber Chamber of Commerce

Sales and orders:

• 53% of companies reported said their domestic sales had remained constant, 12% up on the last quarter.
• 18% reported a decrease, up 4%.
• 26% saw their domestic orders increase, down 11 points. 22% reported a decrease.
• 23% increased their export sales. 16% reported a decrease.

For the next 3 months:

• 28% of companies expect to increase their workforce, down 2%. 12% expect to decrease it, up 3% on the last quarter.
• 21% of companies expect to increase their prices, down 3% on the last quarter. 10% expect to decrease them, up 3%.In the last 3 months:
• The proportion of businesses which recruited was 67%, up 6%.
• 13% reported an increase in cashflow and 29% a decrease, up 7%.
• 29% increased their investment plans for plant & machinery, up 4%. 29% of respondents increased their investment plans for training, down 2%.
  
  For the next 12 months:
  
  
• 56% expect to increase their turnover, down 1%; 21% expect it to decrease, up 8% on the last quarter.
• 52% expect their profitability to improve, 21% think it will worsen, down 7 points on the last quarter.

Pressures:

• Overheads were the biggest concern this time around (+37%), followed by pay settlements (21%), raw material costs (8%) finance (4%).
• Inflation (46%), Competition (23%) exchange rates (13%) and business rates (15%) top businesses’ list of external concerns. 
  
  Downloads and Resources
  QES Q3 2015