Uncertainty held back decision making at the end of 2018
Regional business ended 2018 strongly but uncertainty held back decision making, according to a regional survey.
West & North Yorkshire Chamber of Commerce has published the results of its quarterly economic survey for Q4 2018. The survey, carried out in partnership with the Leeds City Region Enterprise Partnership, highlighted strong employment across the region but indicated a slowing in investment intentions.
Chamber chairman, Gerald Jennings, said: “Our results suggest that major decision making has been paused awaiting the outcome of Brexit negotiations. Whilst underlying factors such as sales and employment remain strong companies are holding making big investment decisions.
“Rising input costs also seem to be having an impact too, in part down to the double edged sword of currency volatility; we expect a greater number of companies will seek to pass on these additional costs in the next quarter.”
Findings of the survey, which was completed by companies collectively employing more than 1 million people, show a divergence between the manufacturing and services sector in the last quarter of 2018. Following a period of domestic growth since Q2 17, the Q4 2018 period saw manufacturers report a slowing in the pace of growth. The service sector continued to report increasing domestic sales, which have trended upwards since the middle of 2016.
Manufacturing export sales also slowed in the last quarter of 2018 across the region, following two quarters of strong growth. The service sector reported no change on the previous quarter in the last three months of 2018.
Employment remained strong across the region with 60% of manufacturers and 48% of service sector companies attempting to recruit in Q4. Skills shortages remained a challenge and the time taken to fill vacancies has lengthened.
Capital investment increased in the last quarter but remained low by historical standards.
Service sector confidence remained largely unchanged in the last quarter, with the number of companies expecting to see increased profits down 2 points to +45%, however the this has been trending downwards since the beginning of 2018. Manufacturing confidence also slowed in the last three months for the second consecutive quarter.
Roger Marsh OBE, chair of the Leeds City Region LEP, added: “Businesses are taking a pragmatic approach to planning for the potential impact of Brexit with many organisations starting to discuss tactics at a strategic level. The impact that the lack of clarity over leaving the European Union has had on businesses continues to be an issue. Going forward we will continue to make the case to Government to ensure the concerns of local businesses are being heard and that there are plans in place to for the continuation of economic growth post-Brexit.
“The robustness of our services sector has meant the region has outperformed the national picture, with businesses ending the year on a three year domestic sales high. In our region the services sector represents 80% of businesses, so it is especially encouraging that domestic sales in the sector are reporting an upward trend.”