Spring brings economic relief and recovery, shows study

YORKSHIRE is showing signs of economic recovery and stability with 74% of businesses reporting their performance has remained stable or improved over the last three months.

According to the Spring 2010 Business Snapshot Survey commissioned by Yorkshire Forward increased sales and more customers were the most frequently reported improvement to business performance.

A third of businesses with improved performance reported that their sales had increased by 30% with a fifth reporting higher numbers of customers (22%).

Expectations about future business performance are quite positive with 38% of businesses thinking their performance will improve and only 13% expecting it to worsen.

A third of all firms expect higher volumes of output and domestic orders in the coming three months as businesses report further improvements in their trading environment.

However, many respondents reported a negative trend in terms of cash flow (38%) and profit margins (35%) over the past three months, indicating a tough competitive environment.

The proportion of businesses seeking additional finance or credit has remained stable with only 8% having sought new finance or new lines of credit.

Recent investment levels in key business areas have been solid, particularly in marketing and sales and staff training which are top of the investment priority list.

Interestingly, it was more recently established companies that reported improved business performance with 39% of establishments in business for fewer than five years reporting improved business performance over the last three months.

This compares to just 28% of companies that are 10 years or older.

There appears to be a distinct difference in performance between small and larger companies, with small businesses with one to nine staff being more likely to report worsening business performance.

While at the same time small companies were more likely to increase their overall investment. However, larger companies are driving the trend for optimistic investment plans in the future.

External costs are driving up cost pressures for many firms with energy costs surpassing transport costs as the single most significant cost pressure in business.

Despite these increasing cost pressures, businesses do not appear eager to pass cost increases on to their customers with just a quarter of businesses passing these costs on.

Patrick Bowes, chief economist for Yorkshire Forward, said: “We recognise that it is a positive change for Yorkshire companies that domestic sales are likely to improve in the next three months and this provides early indication of emerging recovery in UK domestic markets.

“In particular, we are pleased with the performance of the manufacturing sector as 57% of manufacturing businesses have reported improved business performance in the past three months.”

Around 450 businesses in Yorkshire took part in the survey.