Economic growth has ‘stabilised’ says latest business survey

Economic growth across Greater Manchester has ‘stabilised’ following challenges brought on by Omicron, high inflation and the war in Ukraine.

That’s according to the latest Quarterly Economic Survey by Greater Manchester Chamber of Commerce (GMCC).

In its latest findings, The Greater Manchester Index, a composite indicator made of key QES measures, now stands at 32.3, a decrease of 0.2 points from the previous quarter’s results.

This is the fourth quarter in a row that the Greater Manchester IndexTM has been in the low 30s, a firm indicator “that the bounce back from Covid has stabilised.”

The survey of 424 businesses was held between February 15 to March 11.

It revealed that sales in the domestic market to UK customers increased marginally in the construction and services sectors whereas in the manufacturing sector, it declined slightly.

Whilst domestic trade increased overall by 1.5 percentage points, relative to Q4 2021, the decline in international trade in Q1 has offset these modest gains.

On the plus side, the order books of businesses in all sectors seem steady.

That could secure current levels of activity, but it will be reliant on other macro-economic developments.

Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce (pictured), said: “Amongst the economic challenges currently affecting businesses across the city region, inflation is foremost.

“Businesses in all sectors report rising cost of materials, which will be further compounded by impending tax rises.

“Inflation and the soaring cost of living will undoubtedly affect consumer spending, which was sustaining economic growth in 2021.

“We expect inflation to outpace wage growth in the near-term and lessen consumer spending. Business investment is lagging, and this is a serious ongoing concern. Since cash positions have weakened amongst businesses, investment in capital projects is likely to remain constrained.”

Despite the softening in growth, there is optimism that businesses can maintain revenues.

To cover higher costs, many respondents (59%) report that they will be increasing the price at which they sell their goods and services.

57% of QES respondents are looking to add to their employee headcount but two-thirds of those attempting to recruit face recruitment difficulties with skilled and technical occupations currently being the hardest to recruit for.

This has resulted in significant wage inflation.