Chamber survey indicates improving picture for region’s businesses, however challenges remain
Date published:
- Our Quarterly Economic Survey (QES) results indicate an overall decrease in the proportion of businesses citing specific concerns this quarter, especially staff costs and inflation.
- The percentage of businesses reporting price pressures related to finance costs, labour costs and raw materials have all seen a decline over the past three months.
- More businesses are reporting increases in business investment than in the first quarter of the year.
- The proportion of businesses citing concern about staff shortages has decreased in the last quarter and over the past 12 months.
- The overall proportion of firms reporting an improvement in UK sales over the past three months has declined.
- Our QES – the largest independent business survey of its kind in the UK – shows the complexity of economic conditions for businesses in the region.
The latest results from the Chamber’s QES, released today (12 July), show that some of the major economic headwinds faced over the past few years are starting to abate for businesses in the region.
The easing of concerns about price pressures and staff shortages has led to an improvement in business confidence about prospects over the next year. However, declining levels of UK sales and exports for businesses in the North East show that challenges still remain with underlying economic conditions.
Price pressures
The proportion of businesses in the North East citing price pressures related to finance costs (43.7%), labour costs (74.0%), raw material (51.6%), and other overheads (61.6%) have all seen decreases in the last quarter. Pressure from fuel (49.2%) and utilities (59.7%) has remained roughly the same as the previous quarter.
Across sectors, both manufacturers and service providers most frequently report labour costs (75.0 % and 73.7%) as a price pressure.
Workforce and recruitment
This quarter, the proportion of businesses saying that staff shortages are a concern for them has decreased by 7.7% since last quarter and by 19.7% annually, with 35.8% of respondents flagging it as a concern.
Q2 2024 has seen an increase in the percentage of businesses in the region who are looking for part time (+2.8%) or temporary staff (+3.2%). A slight decrease has been seen for full time (-0.3%) and permanent (-1.5%) positions.
Business investment
Of those that participated in this quarter’s research, there has been a 6.7% increase since last quarter in the proportion reporting more investment in plant and machinery for their business.
There has also been an increase in those reporting more investment in training over the past three months, up 3.2% on the first quarter of the year.
Sales and exports
The balance of firms in the North East saying that their UK sales had improved over the past three months has seen a decline of 13.2% since last quarter and a 4.4% decrease from the same time last year.
27.5% of all respondents declared exporting goods and/or services, which represents a 2.5% decrease since last quarter and a 10.1% decrease since last year.
Business confidence
As measured by the balance of firms expecting their profitability to improve over the next three months, Q2 2024 shows a 2.8% increase on last quarter (up 11.9% on a year ago).
Energy usage
78.6% of businesses report taking action to reduce energy expenditure through measures such as turning off equipment (72%), encouraging staff behaviour change (71%) and investing in new, more energy efficient equipment (52%).
Rhiannon Bearne, executive director policy and representation and deputy CEO at the Chamber, said:
“The Chamber’s QES stands as the UK’s largest independent business survey of its kind. This unique survey ensures that the perspectives of every participating business from the North East are communicated directly to national policymakers, including the Treasury and the Bank of England.
“We remain committed to collaborating with Chamber members across the region, from the smallest to the largest businesses, to ensure their voices are heard. This effort is part of the Chamber’s mission to foster a stronger, fairer North East.”
Deborah Walton, president of the Chamber, said:
“I am delighted that one of my first tasks as the Chamber’s new president is to reflect on this quarter’s survey findings.
“We have seen a slightly more positive picture in the latest set of QES results. While headline inflation is coming down, businesses are still experiencing price pressures in labour costs and raw materials. Additionally, firms across the region continue to face challenges with exporting goods and services.
“On a positive note, the percentage of businesses planning plant investments has increased noticeably since the last quarter. Another encouraging sign is the reduction in concerns about staff shortages and staff costs.”
On working with a new government, Deborah said: “This quarter’s summary of business conditions and sentiment is especially important as we enter a new policy landscape working alongside a new government. We now have an opportunity to move from dialogue to delivery.
“Your Chamber will be at the centre of conversations to drive practical policies and bolster the business confidence we are starting to see in this quarter’s survey results.”
Click here to view our Q2 2024 report.