Norfolk sees a slow down in growth
The British Chambers of Commerce (BCC) Quarterly Economic Survey (QES) - Britain's largest and most authoritative private sector business survey, based on almost 7,500 responses from firms, employing around 800,000 people – shows that Britain’s two-tier growth trend continues.
While both manufacturing and service national balances were generally weaker this quarter, manufacturing balances declined to a much larger extent than in services. This was not the case in Norfolk, where both sectors saw falling balances. In Norfolk the service sector dipped on the previous quarter. Nearly all key Norfolk manufacturing balances remained stagnant or fell, this paints a picture of prolonged, slow manufacturing growth.
Caroline Williams, Chief Executive of Norfolk Chamber said:
“Following recent trends, growth in both the service and the manufacturing sectors in Norfolk has slowed over the last quarter. Businesses completing the survey, which represented 37% of the total East of England responses), reported a very limited increase in employment over the last 3 months, despite the reduction in Norfolk’s official unemployment figures. And both sectors continue to report difficulties in recruiting skilled staff. More telling is the falling employment expectations balances for both sectors in the coming 3 months.”
“During the recession, many employees opted for secure employment, however as the economic situation improves, the trend is for them to seek progression and improved wages. This has created gaps in some companies due to a shrinking skills pool.”
“Locally, the oil and gas industry sector advised that whilst contracts are not being cancelled, they are being delayed. The challenge facing businesses at the start of the supply chain is to find ways to sustain their businesses to ensure they are around to take advantage when the upturn comes.”
Overall these results show that the Norfolk business community is falling back into a more cautious approach to growth, however investment is still being made in staff training, despite the weakening order books.”
Key findings in the Q3 2015 Quarterly Economic Survey:
- Overall, the results signal moderate economic growth over the next year, but the UK recovery is facing serious global challenges.
- In both manufacturing and services, most key balances were weaker in Q3 than in Q2, even though there were a few improvements.
- Even so, the falls in the Q3 service balances are in general smaller than the declines in the manufacturing balances.
- In absolute terms, most Q3 service balances are stronger than the manufacturing balances.
- Intentions to increase prices rose sharply in manufacturing (+8% in Q2 2015, +21% in Q3 2015) and also services (+11% in Q2 2015, +20% in Q3 2015).
- The percentage of firms operating at full capacity increased slightly in both main sectors.
- In services, there was a slight downturn from Q2 to Q3 in the Norfolk domestic sales balance (decreasing from +33% to +29%). However the balance for employment in the previous three months (increased from +17% to +20%).
- However, all the other key service balances declined slightly between Q2 and Q3. Confidence in profitability went from +44% to +38%, investment in plant & machinery went from +14% to +12% and employment expectations dipped slightly from +23% to +22%.
- In manufacturing, the Norfolk balances for exports, investment in plant, confidence, employment expectations and cashflow recorded falls between Q2 and Q3.
- From Q2 2015 to Q3 2015 export sales fell from +29% to +0%, export orders fell from +18% to +0%, confidence in turnover fell from +42% to +37%, confidence in profitability fell from +31% to +23%, employment growth expectations fell from +23% to +16% and cashflow fell into negative territory from +8% to -4%.
- Norfolk manufacturers advised an increase in the balance for Investment in training which rose from +3% to +19%
- The domestic manufacturing balances for sales and orders produced mixed results with sales remaining relatively static +5% to +6 % but order, whilst still in negative territory rose from -13% to -2% in Q3 2015.
- The balance of manufacturers who expanded their workforce in the last three months also remained the same at +23% in Q3 2015.
John Longworth, Director General of the British Chambers of Commerce, said:
“These latest survey results are somewhat disappointing, as both manufacturing and service firms experienced dampened growth. The real area of concern is manufacturing. Confidence is low, as growth continued to fall, and our measure of manufacturing export growth hit a six year low. Services growth, on the other hand, dipped only slightly and overall trends show the sector remains relatively strong and stable.”
“Global uncertainty, weakened demand from China and the strength of the pound are some of the factors likely hindering manufacturers’ performance. If the manufacturing sector has entered a prolonged period of slow growth, then closing the trade deficit and improving the current account deficit will become more difficult.”
“If we want to make sure this period of two-tier growth is only temporary then we must help businesses get access to the working and growth capital that they require. We must also deal with the intensifying skills gap, which is holding British businesses back. The Chancellor’s Spending Review is the opportune time to tackle these shortcomings, not only for manufacturers but for all companies. Only action to help fix the fundamentals – skills, infrastructure and access to capital – can help end the UK’s two-tier growth pattern and ensure all businesses can grow.”