The results of the latest Quarterly Economic Survey (QES) from the Chamber of Commerce shows that Lancashire businesses are reporting solid growth and business confidence is beginning to improve after a period of uncertainty in the aftermath of the vote to leave the European Union.
The Q1 2017 survey, compiled in association with Moore and Smalley Chartered Accountants and Business Advisors, shows that the manufacturing sector performed strongly in the first quarter of the year, particularly in the exports market, with the number of firms reporting improved sales and orders higher than in previous quarters.
The services sector continues to rebound from its initial shock in the months immediately after the EU referendum, and while growth has not yet returned to historic levels, it remains a key driver of the Lancashire economy.
The results of the survey found that businesses are continuing to feel inflationary pressures. The percentage of manufacturers reporting raw materials as the key driver of increased prices remains way above the historical average and in both sectors a significant proportion of firms anticipate having to raise their own prices over the next three months.
Commenting on the first quarter results, Babs Murphy, Chief Executive of the North & Western Lancashire Chamber, said: “In the here and now, many businesses are resilient and experiencing solid growth. Many firms tell us their short-term expectations are strong, but that the medium-term picture is far from clear.
“The rise in inflation seen since last year’s EU referendum is the biggest immediate pressure facing most firms. While manufacturers have enjoyed a good quarter, they are facing higher costs at the factory gates, which increasingly translates into companies having to raise their own prices. With inflation already above the Bank of England’s target, this squeeze on firms looks set to continue in the medium term.
“The myriad of upfront costs imposed by government – including business rates, Apprenticeship Levy, National Living Wage and insurance premium tax – are all adding to the overhead costs of firms and the pressure on prices.
“If higher inflation squeezes consumer spending as we expect, the current strength in business activity may not be enough to prevent a period of more muted economic growth.”
The results from the Chambers of Commerce survey were revealed to an audience of local businesses at Preston’s College by Stephen Gregson, Corporate Finance Director at Moore and Smalley. Commenting on the survey, he said:
“We often say that the QES has thrown up another interesting set of results. And sometimes that is truer than others. This is one of those times. In many respects it suggests a stronger performance than the last quarter or even a year ago – more so for manufacturing. But there is also some seemingly significant weakening in some areas- cash flow strength for instance.
“What we can say with absolute certainty is that the QES continues to perform a sterling job, not in giving us the answers to the questions – but in highlighting which might be the most relevant questions to ask.”
Download: QES Q1 2017 – Report