Increasing price pressures concern business
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Inflation, energy and staff costs continue upward trend for concerned firms
Rising inflation continues to pile pressure on regional firms already struggling with spiralling energy costs, according to one of the North East’s most reliable business barometers.
North East England Chamber of Commerce’s Quarterly Economic Survey results, released today (Thursday, 13 October), demonstrate a continuation of the challenging conditions seen in Quarter 1 and 2.
While business conditions appear slightly healthier in Q3 compared to Q2, there remain areas of serious concern, with utilities, labour and fuel costs overtaking recruitment challenges as businesses’ biggest pressure.
The survey also demonstrates cashflow among regional industry remains depressed, following on from the previous quarter at -17.4%, and while this is driving prices into positive territory, it is depressing future profitability for both services and manufacturing firms.
Energy prices are a major worry, with 88.2% of survey respondents expressing concern, and 73% worried about rising staff outlay, but it is rising inflation that is causing most anxiety across the North East business landscape with 89.3% of firms registering concern.
However, there were areas of stability and, in some cases, positivity. Manufacturing figures for UK sales, export sales and export orders have all crawled out of negative territory, compared to last month; and while service sector UK sales and orders expectations have recovered, export statistics still remain a concern.
Andrew Haigh, Chamber President (Newcastle Building Society) said: “The survey was conducted during a period of significant policy change, closing after the Government announced its Energy Relief scheme for businesses and non-domestic users, a policy members welcomed with caution as it only provided an initial six months of support. The Chamber will use the responses to the new questions on energy usage to inform our lobbying of the Government.
“The survey did close before the Chancellor’s Mini-Budget, so reflects views on energy, inflation and staff pressures before the most recent policy announcements, so it will be more important than ever in Quarter 4 that we gather even more intelligence and insight – so that we can work together on solutions as we navigate a difficult winter ahead.”
The Economic Survey is carried out by the North East England Chamber of Commerce in partnership with Durham University Business School. This survey was conducted during August and September 2022 and is based on responses from 180 businesses.
Chamber Director Policy and Representation, Rhiannon Bearne, said: “Quarter 3 results really demonstrate a complex picture, with some small glimmers of hope, but some major causes for concern.
“There is evidence of stability, and even signs of positivity compared to previous quarters, but not enough to allay the real concerns we have about the continued negative trend across so many measures of business health over the last 12 months.”
Download the full survey report here.