All Wales Quarterly Economic Survey Q1 2014 by West Cheshire and North Wales Chamber of Commerce

all wales QUARTERLY ECONOMIC SURVEY RESULTS q1 2014

Q Compiled and published by

CONTENTS Contacts 2 Executive Summary 3 Background Information 4 UK Markets 6 Export Markets 7 Labour Force and Recruitment

Business Confidence 11

To discuss the Quarterly Economic Survey in more detail please contact: Graham Morgan, Director T: 01633 242720 M: 07590 900415 E: graham.morgan@southwaleschamber.co.uk

Nigel Davies, Membership Liaison Officer T: 029 2048 1532 E: nigel.davies@southwaleschamber.co.uk

South Wales Chamber of Commerce Head Office: Orion Suite, Enterprise Way Newport, NP20 2AQ

Mid Wales Chamber of Commerce The Business Unit, Coleg Powys Llanidloes Road Newtown, SY16 4HU

West Cheshire & North Wales Chamber of Commerce Riverside Innovation Centre 1 Castle Drive, Chester, CH1 1SL

www.southwaleschamber.co.uk

www.midwaleschamber.co.uk

www.wcnwchamber.org.uk 2

EXECUTIVE SUMMARY Welcome to the first survey of 2014. Mornings are lighter and evenings have been pushing out given the better weather of late and we move into Spring with increasing confidence and higher levels of optimism amongst business owners and their professional advisors. There is consistent indication the private sector across Wales is seeing ever greater opportunities in the year ahead. This survey includes a first ever feed from North Wales and we have worked with Colin Brew and his team at West Cheshire and North Wales Chamber of Commerce to get this important link up so we can view the landscape of Wales as a whole. All important UK Market Sales and Orders have moved up a notch to 87% and 86% respectively and this increase is showing good consistency in reports from across Wales. Mid Wales is behind on UK Market orders but this remains similar to the Q4 2013 position but across the board we seem to be ahead of the rest of the UK which has witnessed a slip in UK Sales performance in the first Quarter. Export Sales and Orders remain

flat at Q4 2013 levels with the CF and SA post codes lagging other parts of Wales. At the same time Chambers across the UK are reporting greater movement forward in the International Markets than our members are seeing here in Wales. There remains a need to identify those Welsh Businesses which produce fantastic products or deliver exceptional services to consider how they can increase their International footprint and this is where the Bankers and Accountants can really play a role in encouraging clients to link to the many workshops and seminars organised by the Chamber. The Export Trade Advisor Team within Business Wales has now been in operation for 12 months and they offer an excellent hand-holding service to help businesses propel themselves into International markets. Businesses looking to retain their existing staffing levels or recruit in next three months stands at 95% which is the highest we have seen in the last seven years and marks a step up from 92% reported in Q4 2013. It is encouraging that this profile is consistent across Wales.

Beneath the surface we are being told there remains growing pressure in recruiting for certain types of roles and early indication of wage inflation impacting where key staff need to be protected or key skill acquired. Engineering, Electronic and ICT skills are particularly in demand as we have reported previously but also middle management, business development and certain marketing skills. Over the last 18 months we have detected a move by many business owners to look more positively at the Jobs Growth Wales and Apprenticeship schemes to bring youngsters into their businesses and grow and develop them alongside vocational training modules. With access to superfast broadband and much better digital connectivity we do anticipate ICT and social media skills will be an area business owners will look to upskill in.

sense the willingness of Lenders and Financiers to make funds available has improved but both the bureaucracy and cost of funding is perceived to be a barrier to progress in some areas. With the highest ever response rate to our survey we feel confident the private sector business community at large can now see growth opportunity ahead. With massive support to draw upon from schemes available from the Welsh Government there is no better time to start, grow and get bigger within the business sector.

Graham L Morgan DipFS FCIB Director, South & Mid Wales Chambers of Commerce

Cashflow pressures have eased back once again and the number of business owners expecting to sustain or increase their investment in Plant & Equipment remains high at 98%. We do 3

LOCATION OF BUSINESSES

NUMBER OF EMPLOYEES 0

7.6%

0-9

7.7%

56.2%

10-19

11.9%

12.3% 19.4%

7.9%

20-49

14.9%

50-199

200-249

11.3%

1.1%

8.6% 17.9%

250-499

500+

18.6%

Bridgend / Vale of Glamorgan

Cardiff

Carms / Pembs

Newport / Torfaen / Mon / Bl Gwent

Powys / Ceredigion

RCT / Caerphilly / Merthyr

Swansea / Neath Port Talbot

North Wales

2.1%

2.5%

MAIN BUSINESS ACTIVITY 0%

10%

Construction

6.1%

Hotels / Catering

5.9%

Transport / Distribution

2.1% 1.4% 12.5% 4.1%

Professional Services Consumer services Other

30%

3.7%

Manufacture of other Goods Marketing / Media

25%

7.3%

Public / Voluntary Sector Services

Production Raw Materials / Agri

20%

3.5%

Retailing / Wholesaling

Manufacture Electronic / IT

15%

25.9% 4.9% 22.6%

UK MARKET - SALES Increased

UK MARKET - ORDERS Remained Constant

Decreased

Increased

Wales

Remained Constant

Wales 13.1%

14.1%

47.4%

49.7%

37.3%

38.5%

Regional Breakdown

100%

90%

80% 70%

55.7%

50.9%

43.5%

49.0%

45.2%

80% 70%

60%

50%

40% 30%

40.1% 34.5%

37.3%

51.6%

48.5%

40% 35.3%

40.5%

30%

37.0%

37.9%

42.7%

45.8%

41.4%

31.3%

45.0%

20%

20% 10% 0%

Decreased

9.8%

11.8%

16.4%

15.7%

14.3%

10% 0%

Mid

North

11.4%

13.6%

15.9%

22.9% 10.0% Mid

North

EXPORT MARKET - SALES Increased

EXPORT MARKET - ORDERS

Remained Constant

Decreased

Increased

Remained Constant

Wales

Wales 14.8%

14.9%

40.3%

40.9%

44.2%

44.9%

Regional Breakdown

100%

90%

90% 80%

39.7%

38.1%

32.7%

80% 58.3%

70%

50.0%

35.0%

31.9%

70%

58.3%

60.0%

33.3%

30.0%

8.3%

10.0%

Mid

North

50%

50% 41.3%

49.1%

40%

50.0%

30%

41.7% 37.5%

20% 10%

41.7%

60%

40%

Decreased

19.0%

11.9%

0% CF

52.5%

51.1%

30% 20% 10%

18.2%

40.0%

4.2%

8.3%

Mid

North

18.3%

12.5%

17.0%

0% CF

LABOUR FORCE - NEXT QUARTER

Changes to the number of employees in the last three months.

Expected change to the number of employees over the next three months.

Increased

Remained Constant

Decreased

Increased

Wales

Remained Constant

UK AND OVERSEAS MARKETS

LABOUR FORCE - LAST QUARTER

Decreased

Wales 5.1%

10.0% 25.2%

35.5%

59.4%

64.9%

Regional Breakdown

Regional Breakdown 100%

100% 90%

28.9%

25.0%

22.1%

25.0%

20.9%

90%

80%

70%

60%

65.2%

63.4%

65.2%

61.5%

69.8%

40%

30%

20%

10% 0%

31.3%

33.1%

62.5%

61.2%

40.4%

33.3%

50%

50% 40%

39.2%

5.9% CF

55.4%

55.8%

66.7%

10%

11.6%

12.7%

13.5%

9.3%

Mid

North

5.4%

6.3%

5.6%

3.8%

Mid

North

TYPES OF POSITION

RECRUITMENT Companies that have recruited in the last three months. Yes

Full Time

90%

Wales

80%

Part Time

80.1% Part Time Full Time

90%

70%

Permanent Permanent

Temporary Temporary

84.8%

80%

60%

70%

50% 60%

40.6%

38.2%

40% 50%

30.3%

30% 40%

59.4%

40.5%

22.7%

32.1%

20% 30%

24.1%

20% 10% 10% 0% 0%

Regional Breakdown

100%

100% 90%

90% 80%

42.9%

42.5%

34.1% 46.2%

45.5%

70%

70% 60%

60%

50%

40%

40% 30%

80%

57.1%

57.5%

30%

65.9% 53.8%

54.5%

20%

20% 10%

10%

0% CF

Mid

North

CATEGORIES OF JOBS ADVERTISED FOR

RECRUITMENT EXPERIENCES Companies that experienced difficulties in recruiting.

Skilled Manual/Technical 50%

Professional/Managerial

Clerical

Semi/Unskilled

Yes

47.6%

Wales

45%Skilled Manual/Technical 41.1% 50% 40% 45% 35%

Professional/Managerial 49.8%

43.0%

Clerical

35% 25%

Wales

33.3%

30.9%

40% 30%

Semi/Unskilled

34.9%

32.3%

30% 20%

47.0%

25% 15%

53.0%

20% 10% 15% 5% 10% 0% 5% 0%

Regional Breakdown

Regional Breakdown 100%

60%

90% 50%

80% 70%

40%

52.4%

44.7%

50.0%

55.7% 66.7%

60% 30%

50% 40%

20%

30% 10%

20%

47.6%

55.3%

50.0%

44.3% 33.3%

10%

0% CF

Mid

North

0% CF

Mid

North

CASHFLOW

INVESTMENT - EQUIPMENT

Changes to the businessâ&#x20AC;&#x2122; cashflow over the last three months.

Changes to the amount of investment by companies in plant, machinery and equipment.

Improved

Remained the Same

Worsened

Increased

Wales

Remained the same

Decreased

2.0%

Wales 17.7% 28.4%

39.6%

58.5%

53.9%

Regional Breakdown

Regional Breakdown 100%

100% 90% 80%

32.8%

28.4%

23.9%

90%

26.0% 40.0%

80%

70%

60%

50% 40%

53.6%

53.2%

56.3%

52.0%

20.0%

20%

40.0% 18.3%

19.9%

60.0%

Mid

62.3%

56.6%

55.7%

59.6%

20%

36.2%

40.0%

10%

22.0%

0% CF

41.9%

50%

30%

13.5%

40.6%

40%

30%

10%

37.2%

North

0.5% CF

2.8%

2.4%

4.3%

Mid

North

INVESTMENT - TRAINING

TURNOVER EXPECTATIONS - NEXT 12 MONTHS

Changes to the amount of investment by companies in training their workforce. Increased

Remained Constant

Decreased

Increase

Remain Constant

Decrease

1.8%

Wales

8.1%

24.0%

44.0%

54.2%

67.8%

Regional Breakdown

100%

90% 80%

20.0% 42.0%

70%

51.9%

44.0%

37.0%

80% 70%

60%

50% 80.0% 57.4%

45.3%

54.2%

58.7%

61.2% 72.1%

68.1%

60.0%

40% 30%

20%

10% 0%

71.6%

50%

40% 30%

90%

20.0% 24.7%

10%

0.5% CF

2.8% NP

1.8% SA

4.3% Mid

North

3.7% CF

16.3%

30.6%

11.5%

8.2%

14.9%

17.0%

20.0%

Mid

North

PROFITABILITY EXPECTATIONS - NEXT 12 MONTHS Increase

Remain Constant

Wales

PRICE/COST EXPECTATIONS - NEXT 12 MONTHS

Decrease

Increase

Remain Constant 3.1%

Wales

10.3%

Decrease

23.4%

28.7% 61.0%

73.5%

Regional Breakdown

100%

90%

80%

70%

63.0%

60%

54.1%

55.3%

60.0%

71.4%

40%

35.3% 30.7%

10% 0%

6.3% CF

24.0%

25.5% 53.8%

60% 50%

20%

20.4%

70%

50%

30%

23.0%

25.5%

20.0%

16.2%

74.0%

78.7%

70.9%

72.5% 26.9%

30% 20%

12.4%

10.6%

19.1%

20.0%

10% 0%

Mid

North

19.2% 3.1% CF

0.9% NP

5.1%

2.0%

Mid

North

PRESSURES ON BUSINESS Finance

Wales 60%Finance

Pay Pay

BUSINESS CONCERNS

Raw Materials Raw Materials

Other 54.8%

30%

Competition Business Rates

Tax

Competition

Inflation

46.8% 46.9%

51.3%

50%

37.8% 37.8%

40%40%

33.9%

33.8%

31.6% 31.6%

26.3%

30%

Business Rates

60%

40%

Tax Interest Rates

60%

54.9%

50%50%

Interest Rates

Wales

Other

60%

Exchange Rates Inflation Exchange Rates

30%30%

27.2% 27.2%

26.7% 26.7%

26.2%

20%

20% 20%10%

16.6%

10%

10% 0%

10%

Finance

Regional Breakdown 90%

Pay

Raw Materials

Other

Regional 0% Breakdown 60%

0% Finance

80%

Pay

Raw Materials

Other

50%

70% 40%

60% 50%

30%

40% 20%

30% 20%

10%

10% 0%

0% CF

Mid

North

Mid

North