QUARTERLY ECONOMIC REVIEW - …...QUARTERLY ECONOMIC REVIEW QUARTER 4 2014 UK SALES AND ORDERS 84% of manufacturing respondent’s UK sales over the last 3 months remained the same

QUARTERLY

ECONOMIC REVIEW

REPRESENTATION

QUARTERLY

ECONOMIC REVIEW

QUARTER 4 2014

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QUARTERLY ECONOMIC REVIEW QUARTER 4 2014

REPORT SUMMARY NORTHANTS BUSINESSES REPORT INCREASED EXPORT SALES AND

JOB CREATION IN FINAL QUARTER OF 2014

In a Quarterly Economic Survey (QES) released today by Northamptonshire Chamber, the county’s businesses are reporting sharp increases in export sales and advance orders. Whilst exports from Northamptonshire have been on the increase for several consecutive quarters now, Quarter 3 did show a significant slowing down in the pace of that increase.

These latest results show that the rate of growth is speeding up once again.

All 100% of respondents from the services sector reported level or increased export sales over the last three months (up 10%) and level or increased advance orders (up 7%). Whilst still down slightly compared to the previous quarter, 82% of manufacturers said export sales remained the same or increased over the last three months (86% in Quarter 3 and 96% in Quarter 2). A total of 91% of manufacturing respondents also reported advance export orders had increased or stayed the same – up from 86% in Quarter 3.

The QES, which saw 106 businesses who together employ 9,066 people across the county respond, also showed yet again that local companies were recruiting or trying to recruit new staff. A total of 81% of manufacturing respondents said workforce had increased or remained the same during the quarter (up from 67% last quarter) and 34% expected their workforce to increase over the coming three months. No respondents were looking to decrease their workforce during the next three months. Within the service sector, 91% of respondents’ workforce had increased or stayed the same in Quarter 4, with 98% expecting their workforce to increase or stay the same over the next three months.

Despite this recruitment activity, many firms are still operating below full capacity and, out of the 81% of manufacturing and 37% of service respondents who tried to recruit new employees during the quarter, 69% of manufacturing (down

from 70%) and 70% of service sector (up from 59%) experienced difficulties in finding staff with the appropriate skills. Aside from export orders and recruitment and skills, the QES also showed that UK sales and advance orders were up for both sectors during Quarter 4 and that business confidence was growing. Northamptonshire businesses showed

confidence in both turnover and profitability over the next 12 months with 100% of manufacturers expecting turnover to improve or stay the same. Only 3% expect profitability to worsen over the same period. In the service sector, 98% expect turnover and 95% expect profitability to improve or remain the same over the coming year. Business concerns included (in order of importance): competition, business rates, tax, inflation, interest rates and exchange rates.

“This quarter’s QES results show that Northants businesses are confident and hopeful of the coming quarter, and indeed, the next 12 months. “They are taking on new staff, seeing increases in both domestic and international sales and orders and, generally, are

confident of improved turnover and profits.

“However, issues such as skills shortages and business rates need addressing by whoever comes in to power following

the 2015 General Election. The Autumn Statement in December went some way to addressing the key issues facing

businesses but more needs to be done.”

Paul Griffiths, Chief Executive

Northamptonshire Chamber of Commerce

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RESPONSES Northamptonshire Chamber of Commerce’s Quarterly Economic Survey (QES) is a regular independent business

survey and forms part of the biggest and most representative survey of its kind in the UK.

It is widely recognised as a key economic indicator by Government, The Bank of England and independent economists

alike. It also provides both central and local policymakers with an important source of feedback of the performance,

concerns and views of businesses across Northamptonshire.

The QES questionnaire covered ten broad sections;

The fieldwork for Northamptonshire Chamber of Commerce’s latest QES was conducted via electronic and hard copy

questionnaire during the period 10th November to 1st December 2014. This report therefore sets out analysis and

interpretation of the findings for the final quarter of 2014. A total of 106 businesses, employing 9,066 people from

across the county responded. The sector split of respondents is shown in the table below.

0%6%

22%

4%1%4%3%

26%

7%1%3%

23%

0%

Production

Manufacture Electronic / ITGoodsManufacture Other Goods

Construction

Transport / Communication

Retailing / Wholesaling

Hotels / Catering

Professional Services

Marketing / Media

Consumer Services

Public / Voluntary Sector

UK Sales and Orders Activity

Export Sales and Orders Activity

Employment

Recruitment and Skills Shortages

Cashflow

Investment

Business Confidence

Capacity

Price Pressures

External Factors


UK SALES AND ORDERS 84% of manufacturing respondent’s UK sales over the last 3 months remained the same or increased – up from 83% in the prior quarter. On advance orders 91% of respondent’s expected the same or increased sales over the next 3

months (an 8 point increase). 42% of respondents reported an increase in UK sales, and 41% an increase in advance orders. Of the service sector businesses who responded 95% (up 5%) reported that domestic sales, and 96% (up 4%) reported that advance orders, had increased or stayed the same over the last quarter.

* Net (percentage) balances are the difference between the percentage of businesses that expect improving or

increasing positions and those expecting worsening or decreasing ones.

(40)

(20)

0

20

40

60

80

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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UK SALES

Manufacturing Services

(20)

0

20

40

60

80

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

alan

ce

UK ORDERS


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EXPORT SALES AND ORDERS

Export sales and orders remained in positive territory this quarter with

continuing strong results in all measures. Whilst

down on the prior quarter, 82% of manufacturers export sales’

remained the same or increased over the last 3 months. 91% of respondents also reported advance export orders had

increased or stayed the same – up from 86% in the prior quarter. The service sector continues to flourish in relation to exports – All 100% of respondents (up 10%) reporting level or increased export sales over the last 3 months and the same number (100%) reporting level or increased advance orders (up from 93%).

* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.

0

20

40

60

80

100

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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EXPORT ORDERS


0

20

40

60

80

100

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

alan

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EXPORT SALES



EMPLOYMENT 81% of the manufacturing respondents’ workforce had increased or remained the same during the quarter, with 34% expecting their workforce to increase over the coming 3 months. No respondents were looking to decrease their

workforce in the next 3 months. Within the service sector 91% of respondents’ workforce had increased or stayed the same in the last quarter, with 98% expecting their workforce to increase or stay the same over the next 3 months.


0

10

20

30

40

50

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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Workforce - Last 3 Months


0

10

20

30

40

50

60

70

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

alan

ce

Workforce - Next 3 Months


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RECRUITMENT & SKILLS SHORTAGES 81% of manufacturing and 37% of service respondents tried to recruit new employees during the quarter with 83% of manufacturing and 74% of service opportunities being for Full Time jobs.

69% of manufacturing (down from 70%) and 70% of service sector (up from 59%) respondents who tried to recruit experienced difficulties in finding staff.

0

20

40

60

80

100

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

%

Businesses Attempting to Recruit


0

20

40

60

80

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

%

Businesses Experiencing Difficulties to Recruit



The following table highlights the skills areas where businesses experienced difficulty in sourcing new employees

during the quarter.

CASHFLOW & INVESTMENT This quarter’s result shows an improvement in the cashflow position for service businesses but a dip for manufacturers - 84% of manufacturing respondents (down from 94%) and 89% of service sector respondents (up from 86%) reporting an improvement or level cashflow during the quarter.

0

5

10

15

20

25

Skilled Manual /Technical

Professional /Managerial

Clerical Un / Semi-Skilled

No

.

Skills Shortages

Manufacturing

Services

All Responses

(10)

0

10

20

30

40

50

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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Cashflow


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Cashflow which had been an issue, especially with the service sector, for a number of quarters appears to have improved with only 1 of the last 7 quarters’ results returning a negative net (percentage) balance.

Of the manufacturing respondents 6% reported a worsening of plans to invest in Plant & Machinery and only 3% reported a worsening of plans to invest in Training. Investment plans for the service sector were similar to the prior

quarter with 96% (plant & machinery) and 94% (training) reporting level or increased investment plans this quarter.


0

10

20

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40

50

60

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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Investment - Plant & Machinery


0

10

20

30

40

50

60

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

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Investment - Training


% Balance Q1 - 2013

Q2 - 2013

Q3 - 2013

Q4 - 2013

Q1 - 2014

Q2 - 2014

Q3 - 2014

Q4 - 2014

Manufacturing (6) 32 11 26 19 27 40 9

Services (1) 0 (3) 5 28 13 15 21


CONFIDENCE Northamptonshire businesses continue to show confidence in both turnover and profitability over the next 12 months.

100% (up from 97% in the last 3 quarters) of manufacturers expect turnover to improve or stay the same over the next 12 months and only 3% expect profitability to worsen over the same period. With the service sector 98% expect turnover and 95% expect profitability to improve or remain the same over the coming year (up 4% and 2% compared to the prior quarter).

BUSINESS CONFIDENCE – TURNOVER NEXT 12 MONTHS - NET BALANCES

% Balance Q1 - 2013

Q2 - 2013

Q3 - 2013

Q4 - 2013

Q1 – 2014

Q2 – 2014

Q3 – 2014

Q4 – 2014

Manufacturing 23 50 68 71 74 79 74 69

Services 35 38 66 71 81 70 74 78


0

20

40

60

80

100

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

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CONFIDENCE - Turnover


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BUSINESS CONFIDENCE – PROFITABILITY NEXT 12 MONTHS – NET BALANCES

% Balance Q1 - 2013

Q2 - 2013

Q3 - 2013

Q4 - 2013

Q1 - 2014

Q2 - 2014

Q3 - 2014

Q4 - 2014

Manufacturing 9 32 47 50 65 67 59 55

Services 24 24 46 55 71 66 63 66


0

20

40

60

80

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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CONFIDENCE - Profitablity



CAPACITY Many businesses are still operating below full capacity, however, the quarter 4 results were up for manufacturing and down for the service sector compared to the prior quarter results with 50% of manufacturing (34% quarter 3) and

33% of service sector (down from 65% quarter 3) respondents reporting that they are at full capacity.

50%50%

CAPACITY - Manufacturing

Full Capacity Below Full Capacity

33%

67%

CAPACITY - Service

Full Capacity Below Full Capacity

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PRICE PRESSURES The survey highlighted a declining position to quarter 3 for manufacturers expecting prices to rise at 38% (14% quarter 3). 39% of service businesses expected they would raise prices in the next 3 months compared to 25% the previous quarter.

As highlighted in the following graph, raw materials and other overheads are the main pressures for manufacturers to raise prices - both @ 45%. Price pressure from other overheads is still the main concern for service respondents @ 32% (up from 26% in the prior quarter).


0

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40

Q1 - 2013 Q2 - 2013 Q3 - 2013 Q4 - 2013 Q1 - 2014 Q2 - 2014 Q3 - 2014 Q4 - 2014

Net

% B

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PRICE PRESSURES


0

5

10

15

20

25

30

35

40

Pay Settlements Raw Materials Finance Costs Other Overheads

No

.

Pressure on Prices

Manufacturing

Services

All Responses


EXTERNAL FACTORS Of the external factors affecting businesses the leading factor that is of more concern to businesses now than 3

months ago for both sectors is Competition (45% manufacturing and 33% service).

05

1015202530354045

No

.

External Factors of Concern

Manufacturing

Services

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QUARTERLY ECONOMIC REVIEW - …...QUARTERLY ECONOMIC REVIEW QUARTER 4 2014 UK SALES AND ORDERS 84% of manufacturing respondent’s UK sales over the last 3 months remained the same