Positive signs but expect some growing pains

The Chamber’s Quarterly Economic Survey for the first quarter of 2023 closed on 9 March, receiving 347 responses. Chris Hobson (pictured), director of policy and insight, summarises the key findings – with indicators finally beginning to point in the right direction.

QUARTERLY ECONOMIC SURVEY - Q1 2023

Following an uncertain end to the year, the results from Q1 demonstrates how businesses are beginning 2023 by displaying signs of growth and an increasing confidence for the year ahead.

There was a small growth in quarter-on-quarter domestic sales. In advanced orders, there was a jump from 23% of businesses witnessing an increase at the end of 2022 to 31% in this quarter, a pattern that was mirrored for overseas markets.

With regards to labour, 26% increased their workforce in the quarter, with 35% anticipating an increase over the coming three months. Some 59% attempted to recruit over the past quarter – up from 55% at the end of 2022 but still below the level of 12 months ago.

Encouragingly, of those trying to recruit there was a drop in people reporting difficulties in finding the right staff – down to 73% from the eight in 10 businesses reporting struggles in the last survey.

In other indicators, cashflow performance also improved from the previous quarter, although there are still significantly more businesses reporting a decline in cashflow (35%) as opposed to an increase (22%).

The sentiment-type indicators were all positive quarter-onquarter, although some remain marginal. While 18% were planning to increase their investment in machinery and equipment, 17% anticipated a decrease; 23% were intending to up their investment in training, compared to 8% decreasing this.

Price pressures continue their gradual drop-off, with 54% anticipating an increase in their prices, down from 58% the previous quarter and 60% the quarter before that. Of those factors driving this pressure, labour costs were the outright largest factor, followed by utilities, with raw materials dropping back and fuel further behind.

For overall confidence, there was a sharp growth in expectations for turnover – 56% expect this to increase, up from 48% last quarter – and profitability, with 38% expecting an increase, up from 34%.

For both areas, there was a corresponding drop in those expecting to see a decline.

To read the full QES report, visit www.emc-dnl.co.uk/services/ have-your-say/qes-reports

Qes Indicators

Indicators: net value Q4 2022; net value Q1 2023; net change over quarter (highlighted in green or red to indicate positive or negative direction)

UK sales: 5%; 6%; +1%

UK orders: -6%; 9% +15%

Overseas sales: -5%; 1% +6%

Overseas orders: 0%; 6%; +6%

Labour force (past three months): 5%; 12%; +7%

Labour force (next three months): 16%; 30% +14%

Cashflow: -17%; -13%; +4%

Future prices: 57%; 52%; -5%

Investment in machinery: -5%; 1%; +6%

Investment in training: 3%; 15%; +12%

Confidence in turnover: 24%; 39%; +15%

Confidence in profitability: -3%; 8%; +11%

*Net value = increase/decrease