Manufacturing sector set to bolster Greater Birmingham in Q1

Paul Faulkner, chief executive, Greater Birmingham Chamber of Commerce
X The Business Desk

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A resilient manufacturing sector is set to bolster Greater Birmingham from the economic headwinds which caused so much unrest during 2017.

The Q4 economic survey from the Greater Birmingham Chambers of Commerce (GBCC) suggested that increased orders for manufacturers would herald a strong start to 2018.

However, concerns remain over the future direction of the local economy.

Firms in both the manufacturing and service sectors reported strong performances in domestic and export sales during Q4, with many optimistic for 2018.

The survey also suggested better news on the skills front, with the balance in the number of firms from all sectors reporting an increased workforce rising from 58% to 61%.

The domestic demand balance rose by one point to 69 – the highest figure seen since the start of the year. Half (50%) of firms in both sectors recorded an increase in their domestic sales, with 12% reporting a drop in their UK sales, down from the previous figure of 16%.

However, there were acute differences in the individual sectors. Service firms saw a two-point increase in the balance score for UK sales, as the number of companies reporting decreased domestic sales fell from 16% to 11%.

The manufacturing balance of domestic sales revealed a two-point drop as a higher percentage of firms reported a downturn in their UK output (up from 14% in Q3 to 18% in Q4).

In terms of domestic orders, the balance figure for firms in the two sectors combined remained at 67, mainly predicated on manufacturers, with many firms expecting a rise in their advance orders heading into Q1 2018.

Paul Faulkner, chief executive of the GBCC, said: “The latest results revealed that healthy levels of domestic and international output were upheld. It was pleasing to see concerns over accessing the right talent lessen and a slight upturn in the levels that firms were investing in training their staff.

“And strong projections around profitability and turnover were also maintained as firms across Greater Birmingham continue to exhibit an air of optimism.”

Professor Julian Beer, deputy vice-chancellor of the BCU, added: “Overall, the QBR (quarterly business report) indicates some recent firming from the previous three quarters’ weakening, but still off the equivalent 2016 quarter’s highs.
Nevertheless, the local economy remains in positive territory.

“While over half of all firms indicated increased recruitment demand (actual and intended), manufacturers reported difficulties recruiting sufficient skilled and technical staff. Further, services sector firms reported similar problems in attracting professional and managerial candidates.

“Price pressures were also seen by both sectors as tightening, with raw material inputs a key concern for manufacturers. Following three quarters of slackening performance, the pick-up recorded this quarter tentatively suggests that going into 2018 Birmingham growth prospects are favourable.”

Raj Kandola, senior policy and patron adviser at the GBCC, said: “The political and economic arena remains in a state of flux – now is the time for Government to demonstrate they are on the side of the business community.”