Latest business survey reveals slight dampening in demand

Subrahmaniam Krishnan-Harihara

After signs of nascent recovery, there has been a slight dampening in demand, according to the third GM COVID-19 Recovery Tracker survey conducted by Greater Manchester Chamber of Commerce.

The first and second of the chamber’s COVID-19 Recovery Tracker surveys showed improvement in both customer demand and cash positions relative to the low levels in Spring.

The latest survey shows that current sales have declined slightly compared with the levels recorded in late July.

There could be two reasons for this. First, seasonal fluctuations – the month of August, as the main holiday period, does see a slight reduction in demand.

Secondly, additional restrictions imposed in Greater Manchester at the end of July could have contributed to a reduction in the number of people visiting the high street or eating out.

Anecdotal evidence indicates that, despite a spike in footfall early in August, the ‘Eat Out to Help Out’ scheme may not have had the desired impact.

The balances relating to customer demand are still negative, which means more businesses reported reductions rather than improvements.

The reduction in sales and revenues remains the primary challenge that businesses have been facing during the pandemic, but compared with historic lows during lockdown, there is continuing improvement.

Subrahmaniam Krishnan-Harihara, head of research at Greater Manchester Chamber of Commerce, said: “The chamber’s COVID-19 tracker surveys shows the recovery trajectory for Greater Manchester’s economy after the historic economic collapse.

“The ONS recently confirmed that the UK is now officially in a recession. That is no surprise and our data has shown that a full recovery is some time away.

“Current sales have decreased in the latest tracker, but seasonal variations would have contributed to it.

“Although there is cautious optimism amongst businesses, serious concerns remain around the additional restrictions already imposed and the prospect of a full lockdown in parts of Greater Manchester.”

Cash flow positions have remained stable in the latest tracker and business confidence is slowly improving.

Capacity utilisation is still low and more than 80% of businesses report that they are operating well below full capacity.

Unless customer demand across all sectors picks up further, capacity utilisation is likely to remain low.

Subrahmaniam added: “Further improvement in liquidity is critical to business investment.

“The good news is that businesses are reporting a pick-up in advance orders. If this trend holds steady, the continued improvement in order books will translate into higher revenues. This is also critical to increases in capacity utilisation.

“I would expect the short-term outlook to more or less be on target.

“However, if there is a further increase in COVID-19 infections that require a full lockdown to be implemented there is likely to be a prolonged period of economic stagnation.

“If the Government does need to impose local lockdown, there has to be total clarity and accountability in both how this is communicated, and the measures that businesses have to implement to continue trading.

“Along with that, there must also be a package of financial support available for businesses and employees that are adversely affected by any future lockdown.

“Without that additional support, abrupt imposition of lockdown measures puts economic recovery at peril.”

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