Firms start to show confidence in the future
THE business environment in East Yorkshire and Northern Lincolnshire has improved for the second quarter running but remains very difficult, according to the latest results from Hull & Humber Chamber of Commerce’s Quarterly Economic Survey.
Employment indicators were the most positive for a year, with 13% of companies increasing the size of their workforce over the last three months – the highest figure since the second quarter of 2008. A total of 23% decreased the size of their workforce, down 6 points.
The balance of employment expectations showed a sharp rise of 18 points from -24 to -6, with 14% predicting an increase in the size of their workforce over the next three months.
Sales figures for Q2 showed small improvements on Q1. The balance of domestic sales improved by 2 points and the balance of domestic orders by 1 point.
Exporters fared better, with the balance of export sales increasing by 10 points and the balance of export orders by 12 points.
Despite the relatively weak sales improvements, confidence showed promising increases. Turnover expectations rose from -35 in Q4 2008 to -11 in Q1 2009 and now -2 in Q2 2009. Profitability expectations rose from -49 in Q2 2008 to -25 in Q1 2009 and now -17 in Q2 2009.
Richard Kendall, policy executive at Hull & Humber Chamber of Commerce, said: “After two quarters of improving results businesses are feeling more optimistic about the future. Turnover expectations are close to returning to positive and profitability is following behind, although sales performance has yet to pick up significantly.
“The indicators for employment are particularly good news, suggesting that the bulk of widespread job losses may be behind us. Companies are staying flexible, though, with most recruiting any new staff on temporary contracts.
“We are not out of the recession yet, but barring any major shocks over the coming months the signs are that we are on an upward trend.
“However, the gains companies are making are fragile and could easily be lost. Any increases in business taxation or red tape now could be disastrous and lead to a W-shaped recession.
“The Government should send a positive message to businesses by abandoning the planned increase in National Insurance contributions, which would be a tax on jobs.”
David Kern, chief economist at the British Chambers of Commerce, added: “The pace of decline in the UK economy is clearly moderating. The worst phase of the recession is over, but serious downward pressures persist across all sectors and regions. Most key balances are still in negative territory and remain weak by historical standards. Recovery is now possible but it is not yet secure.
“Further corrective measures are still needed to support the economy. The marked improvement in confidence, albeit from exceptionally low levels, is welcome.
“However, these recent gains can only be sustained if the economy continues to stabilise and the recession ends.”
