The results of the latest Quarterly Economic Survey (QES) from the Chamber of Commerce suggest a further slowdown in Lancashire economy in the later part of the year with most key balance measures down on previous levels.
The Q4 survey, compiled by the county’s Chambers of Commerce in association with MHA Moore and Smalley Chartered Accountants and Business Advisors, shows that sales at home and abroad weakened compared to the previous quarter although manufacturing performance was still strong by historical standards.
In the service sector, the main driver of the economy, growth remains muted and is below historic averages. The proportion of firms confident that turnover and profitability will improve in the next year decreased, and there was also a notable decline in the retrospective and forward looking employment balances. Investment intentions were also down on the previous quarter.
The results also reveal that firms are still under considerable pressure to increase prices with 43% of firms expecting to increase the price of their goods and services in the next three months. Raw material costs and exchange rate fluctuations are of greatest concern to manufacturers, whilst overhead costs and inflation are having a greater impact on service businesses.
Commenting on the fourth quarter results, Alan Welsh, Policy Manager at the North & Western Lancashire Chamber, said:
“The results of our fourth quarter survey are in tune with OBR forecasts for slow growth in the coming months. Household incomes and spending are being squeezed by higher inflation which is a major concern, especially for consumer-facing businesses.
“Whilst business confidence remains relatively high, some of the previous optimism that turnover and profitability will improve in the year ahead is beginning to evaporate as businesses come under more pressure from increasing costs, higher wage demands, and difficulties recruiting and retaining skilled employees.
“Continuing uncertainty over the impact of Brexit coupled with high inflation and weak productivity are likely to dampen overall economic activity in the year ahead.
The results from the Chambers of Commerce survey were revealed to an audience of local businesses at Preston’s College this morning (Tuesday 9th January) by Stephen Gregson, Corporate Finance Director at MHA Moore and Smalley. Commenting on the survey, he said:
“An interesting set of results, although perhaps not for the right reasons. There is a clear sense of weakening against the previous quarter and that of 12 months ago.
“This may be due to the confluence of several factors – the first Bank of England base rate rise in a decade; seeming great uncertainty in Government as to exactly what ‘Brexit’ will look like and what its impacts will be; a reduction in consumer spending albeit slight at the moment; and official forecasts such as those by the OBR suggesting that GDP growth will be lower for longer than might have appeared to be the case.
“Since the 2008 crash, every year has been challenging for many businesses and their workers. This quarter’s survey suggests that 2018 will continue to be so – and may possibly become a little more difficult than that for some.”