Chamber’s concern over ‘rapidly toughening’ trading conditions

A “rapidly toughening marketplace for local businesses” is the verdict of the Hull & Humber Chamber of Commerce’s Economic Survey for the first quarter of 2018, with all key sectors showing a decline.

Chief executive Dr Ian Kelly says: “The Chamber is sensing a rapidly toughening marketplace for our local businesses.

“The national picture, with the exception of the export sector, is also muted despite quite strong global trading conditions.

“With more public sector cuts and interest rate increases recently, plus added up-front costs to business in the form of raw material prices, minimum wage increases, auto pension enrolment costs, business rate rises and the apprenticeship levy, the Government needs to take great care not to over-burden the capacity of our businesses to generate the growth and jobs needed to sustain economic recovery.”

The results from the Hull & Humber Chamber of Commerce reinforce those for the last quarter of 2017 which came on the back of the first interest rate rise in 10 years.

Tough trading conditions are now “biting harder” into the domestic and export markets, the Chamber said.

The balance figures for the home sales and home orders sectors were both markedly down, 16 and 14 points respectively, dropping from 28 and 17 in Q4 of 2017 to 12 and 3 this quarter.

Export sales and orders were also on the slide this quarter, with export sales dropping 29 points and export orders down by 40 points, with a balance figure of –4, the first time it has dropped into negative territory since the third quarter of 2016.

The balance figure for companies’ cashflow in the past three months also dropped 16 points into negative territory, while profit expectations for the next quarter fell by 13 points to 14.

Turnover expectations for the next three months were also down, with the balance figure dropping 17 points from 48 to 31, however, four per cent more companies, 38%, said they were working at full capacity.

Despite the downturn demonstrated in this quarter’s results, the employment figures brought more positive news, with three per cent more companies saying they had employed someone in the last three months, while expected employment in the next three months was also in positive territory with the number of firms saying they would be looking to recruit staff rising by 14 points.

The number of companies planning to invest in new plant or machinery rose by two percent, however, the balance figure remained in negative territory at –8.

Fifty-eight per cent of firms expected prices to increase in the next three months, up six percent, while the balance figure fell by one point to 58.

Overheads were the biggest concern for respondents this quarter, with more than half of firms airing their concerns, while pay settlements and raw material costs were also high on the agenda.

Access to finance was less of a worry, with only a quarter of firms highlighting that as a concern, down from 37 points in the last quarter of 2017.

Business rate fears rose for the third consecutive quarter, this time up to 22%, as did worries over tax increases, although interest and exchange rate fears were both down this time around, with competition remaining a constant concern.