Chamber survey results show complex economic conditions for region’s businesses
Date published:
- Our Quarterly Economic Survey (QES) results indicate an overall decrease in business concerns but business rates, energy prices and staff costs have all increased as areas of concern since the end of 2023
- This quarter has seen an increase in price pressures, with labour costs affecting the most businesses
- Nearly 80% of businesses report taking action to reduce energy expenditure, showing a positive approach to net zero and sustainability
- Fewer businesses exported goods and/or services this quarter
- 41.5% of businesses report operating at full capacity in Q1 2024, a small improvement on both the previous quarter and the last 12 months
- Businesses report fewer recruitment difficulties compared to last quarter, with decreases across all indicators.
The Chamber’s Quarterly Economic Survey (QES) – the largest independent business survey of its kind in the UK – shows the complexity of economic conditions for businesses in the region.
The results, released today (12 April), provide a picture of two halves, with business confidence improving in key areas of economic health whilst inflationary pressures around core costs remain. Ahead of local and mayoral elections in May, this real-time insight from the region’s business base provides important signals as to the priorities of North East Chamber members for the region’s leaders.
Price pressures
Despite results showing an overall decrease in business concerns, businesses report continued inflationary pressures with the largest quarterly rises in labour costs, raw material (up 6.6% from Q4 2023), and other overheads.
Business rates (up 10.2%), energy prices (up 4.6%) and staff costs (up 1.1%) have all increased as areas of concern for businesses since the end of 2023. This is also true of both manufacturers and service sector firms, showing greater convergence in sector sentiment than over the last few years.
Cashflow
Cashflow is also down despite positive price projections, a picture explored further in the new section of the report taking a long view of the data.
Exports
Results show that fewer businesses exported goods and/or services this quarter (29.9%, down 5.1% on a quarter previous). In terms of sectors, 60.6% of manufacturers exported goods and/or services against 21.1% of service providers.
This decline in reported trading activity against a backdrop of rising costs is a major challenge for businesses across the North East.
Business capacity
More positively, 41.5% of businesses report operating at full capacity in Q1 2024, a small improvement on both the previous quarter and the last 12 months.
Energy usage
78.8% of businesses report taking action to reduce energy expenditure through measures such as turning off equipment, encouraging staff behaviour change and investing in new, more energy efficient equipment.
The reduction in businesses’ concerns about energy prices coupled with organisations’ own investment in energy efficiency measures is a positive finding and shows businesses are taking a proactive approach to the net zero agenda.
Workforce and recruitment
There has been an increase in businesses looking for staff, with demand for full-time (3.8%), temporary (1.9%) and permanent (2.9%) positions all rising.
Conversely, businesses report fewer recruitment difficulties compared to last quarter, with decreases across all indicators. This is true of clerical positions (-6.8%), professional and managerial positions (-5.6%), semi and unskilled positions (-3.0%) and of skilled manual and technical positions (-4.9%).
Rhiannon Bearne, executive director policy and representation at the Chamber, said:
“The QES covers businesses of all sizes and sectors providing an up to the minute picture of business sentiment.
“What that means for us here in the North East is that we can take key insights to our regular events both regionally and nationally, feeding real-time findings to policymakers and directly shaping the economic agenda. This is the power of our network.
“This quarter we have listened to member views on what works with the QES. In response we have changed the report’s style to make it easier to find the information businesses need now. With quick summaries and accessible breakdowns of the key factors affecting North East businesses, we hope it continues to provide organisations with a clear insight into the business landscape and helps to build better, stronger businesses.”
Andrew Haigh, president of the Chamber, said:
“It is fair to say that we have seen a mixed picture in the latest set of QES results. Headline inflation is coming down, but we are continuing to see price pressures in fuel and raw material prices. It is also clear that firms across the region continue to experience challenges when it comes to exporting goods and services.
“It is, of course, welcome news that the percentage of firms reporting working at full capacity is on the rise, albeit with modest increases. Areas of concern are also generally continuing their downward trend, although there are some notable exceptions, including with worries about business rates starting to increase.
“These results are a reminder of how much work is needed to drive a thriving economy and support its engine.
“With the local and regional elections fast approaching, along with a general election likely before the end of the year, we remain hopeful for policies for the long term, to help build business confidence.”
Click here to view our Q1 2024 report.