Suffolk business activity further slows down amid Brexit uncertainty

Suffolk business activity further slows down amid Brexit uncertainty

The latest figures from Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for the first three months of 2019 show a worrying decline in activity and confidence against the backdrop of the Brexit process.

In general terms, all of the categories measured by the QES have continued to decline from earlier peaks in 2017, although the county is broadly in line in these regards when compared with the UK as a whole.

Overall, Suffolk manufacturing firms continue to report more bullish data than their service equivalents and account for one of just two improvements on the fourth quarter 2018’s figures, with domestic sales showing an increase from +13% to +23% (ie the difference between those companies reporting improvements and those reporting declines was a positive of 23%).

Service companies reporting increases in domestic sales fell during the same period from +25% to +12%.

These results are based on responses from 136 Suffolk-based organisations, with 31 from the manufacturing sector and 105 involved in services.

The figures for cashflow, profitability and overseas orders are all now in negative territory, for the first time in over two years.

Cashflow fell from +18% to -11% for manufacturers and from +17% to -6% for service companies.

Profitability slipped from 0% to -6% for manufacturing companies and from -2% to -12% for their service counterparts.

In terms of overseas orders, there was a dramatic decline for manufacturers from +32% to -10% and a lesser, but still pronounced, slippage for service companies from +3% to -17%.

There were much smaller declines in employment activity – all of which either stayed in positive territory or were on zero (where the numbers increasing staff numbers equalled those not planning to do so).

The manufacturing sector saw no employment growth – down from the previous quarter’s figure of +12%. In the service sector, the local balance fell very slightly from +12% to +11%.

The numbers of companies reported a continuing difficulty in finding the right staff fell again, but all remain positive (+54% for manufacturers and +10% for service companies).

When asked about their main external areas of concern, Suffolk’s businesses reported that competition (named by 41% of companies), exchange rates and inflation (both 37%) were their most significant issues.

Paul Simon, Suffolk Chamber’s head of communications and campaigns, said “these figures suggest that the previous gentle decline in current and planned business activity and sentiment in Suffolk is accelerating and that must be a cause for worry.

“The declines in cashflow and profitability, especially for manufacturers, could well be a reflection of the level of stockpiling that many have had to implement in order to plan for a possible chaotic no deal exit from the European Union.

“That said, given the context of Brexit and a general sense in which the Government is failing to come to grips with the needs of business in terms of the fundamentals of the economy, the situation could have been a lot worse. The figures suggest that the Suffolk business community remains remarkably resilient in the circumstances.

“Once again, these results will strengthen our resolve to work through the British Chambers of Commerce to fix the business fundamentals.

The key headlines from the survey are:

  • The balance of manufacturing firms reporting an increase in domestic sales rose from +13% to +23%, and fell from +25% to +12% for those in services
  • The balance of manufacturing firms reporting an increase in domestic orders fell from +19% to +13%, and fell from +22% to +5% for those in services
  • The balance of manufacturing firms reporting an increase in overseas sales fell from +41% to 0%, and fell from +9% to 0% for those in services
  • The balance of manufacturing firms reporting an increase in overseas orders fell from +32% to -10%, and fell from +3% to -17% for those in services
  • The balance of manufacturing firms reporting an increase in employment fell from +12% to 0%, and fell from +12% to +11% for those in services
  • The balance of manufacturing firms anticipating a future increase in employment fell from +22% to +6%, and rose from +15% to +27% for those in services
  • The balance of manufacturing firms which had attempted to recruit staff fell from +60% to +54%, with those in services falling from +57% to +10%
  • The balance of manufacturing firms projecting an increase in turnover fell from +21% to +9%, with those in services decreasing from +28% to +25%
  • The balance of manufacturing firms projecting an increase in profitability fell from 0% to -6%, with those in services decreasing from -2% to -12%
  • The balance of manufacturing firms projecting an increase in cashflow fell from +18% to -11%, with those in services decreasing from -+7% to -6%