Chambers’ survey reveals resilience, but fears over impact of inflation
A survey conducted prior to the Omicron outbreak shows Liverpool City Region businesses were feeling increasingly optimistic about their future performance.
The Quarterly Economic Survey conducted by the five regional Chambers of Commerce – Liverpool & Sefton, Knowsley, Wirral, Halton and St Helens – found members were demonstrating some positive trends in overall recovery and confidence for future turnover and profitability.
However, the ongoing stagnation of the national economy was similarly reflected in the city region, with growth inhibited by a combination of factors including rising inflation, a shortfall of available labour to meet business demand, supply chain pressures and costs, particularly concerning raw materials and energy.
The five chambers say the survey demonstrates the importance of tackling critical issues in the city region, including building a future labour market to meet employer needs, reducing cost burdens on employers as they continue to rebuild and capitalising on its place-based assets to stimulate a dynamic, entrepreneurial culture and proposition for investment.
Businesses continue to endure unprecedented pressures on a local and national level yet, despite these challenges, the survey suggested that the performance of businesses in the final quarter of 2021, before the onset of Omicron restrictions, remained generally positive and indicates that an economic rebound is possible once the impact of covid dissipates.
Higher inflation is adding to the rising costs facing businesses, many of whom are under increasing pressure to pass those costs on to their customers by raising prices. This is expected to continue in the coming months, inhibiting the ability of businesses to move forward with confidence.
The five chambers are urging the Government to offer short term, interim support for those industries bearing the brunt of the latest restrictions to enable the city region economy to be primed for greater longer term sustainable recovery and growth, underpinned by a focus on the systemic issues of skills shortages, business investment and wealth inequality.
A total of 200 businesses responded to the survey in the Liverpool City Region and the data revealed:
- Increases in domestic and international sales across service and manufacturing firms, although the rate of increase slowed compared with the previous quarter, suggesting ongoing stagnation in the market
- Domestic and overseas orders reported by manufacturing firms also increased but the rate of growth was seven per cent (domestic) and 14% (international) lower than that reported in the previous quarter
- A challenging talent recruitment environment continued with 83% of firms reporting recruitment difficulties
- A general stagnation in investment activity and intentions in both workforce and capital equipment with just 27% of firms increasing their investments in equipment, machinery and technology and 25% investing in workforce training
- Strong expectation of supply costs increasing, with 44% of responding businesses expecting costs to rise in the next three months
- A good level of confidence expressed in future turnover and profitability with 60% and 51% of firms, respectively, reporting a positive outlook for the year ahead
- A high level of concern about inflationary pressures exists within manufacturing businesses, with a doubling of those expressing concerns about inflation compared with the previous quarter of data.
The results of national and local surveys will be presented and discussed at Liverpool Chamber’s Economic Business Breakfast on Friday, January 28, at Liverpool Hope University, with guests including Suren Thiru, head of economics at British Chambers of Commerce, and Alison Stuart, North West agent for the Bank of England.