Business survey shows encouraging outlook

Businesses in Yorkshire are growing in confidence, with expectations on increasing profits, recruiting more staff and boosting sales all having risen in the past three months, West & North Yorkshire Chamber of Commerce today reports.

Data published in the Chamber’s latest Quarterly Economic Survey shows an improving picture on sales, hiring intent, investment and profitability during the first quarter of 2024.

After months of stagnation, overseas trade looks to be significantly picking up, with sales having been boosted from the start of the year and with close to half of all exporters reporting that their order books have improved.  However, the cost of labour continues to pose headaches for businesses and just over one in three firms surveyed said they were concerned about the impact the conflict in the Middle East would have on their business.

Amanda Beresford, chair of West & North Yorkshire Chamber of Commerce, said: “Our latest Quarterly Economic Survey shows great levels of appetite to invest and take on staff, with outlook on profits and orders also showing a marked improvement.  This is most welcome news, especially given that the previous QES had shown a more negative outlook.  

“Clearly, much uncertainty persists. The levels of businesses concerned about the conflict in the Middle East remains high, as do worries over interest rates.  While instability might be the new normal, we have the resilience and leadership here in Yorkshire to deliver a vibrant and bright economy that is able to create jobs, fuel investment and bolster profits.”

The survey showed an improvement in domestic sales activity, with 32 per cent of service sector firms and 26 per cent of manufacturers having grown their sales in Q1. Exports too showed a big improvement, with service firms boosting sales by 34 points and manufacturers showing a 46 per cent improvement in order books.   Firms across the region reported increasing hiring and improved prospects for taking on additional staffers in the coming months. Meanwhile the level of firms looking to invest has risen since the start of the year.

The cost of labour is now squarely the top issue facing businesses in our region. Sixty-two per cent of manufacturers and 60 per cent of services firms cited it as the chief cost pressure. Despite falls in inflation, the cost of doing business remains very high, with raw material costs and utilities continuing to be cited as major issues. Interestingly, taxation has steadily crept up the league table of cost pressures, again most notably for service industries.

Finally, when it comes to profitability, our manufacturing community reported a significant increase in confidence of improved profitability during the next three months, up 25 points. Service sector firms are also upbeat, up by four per cent on the same metric.

Mark Casci, Head of Policy at West & North Yorkshire Chamber, said: “The first quarter’s findings show an improving picture on sales – both domestic and international, on hiring intent, upon investment and on expectations around improved profitability.  The findings are based on fieldwork carried out when it was confirmed the UK had entered a technical recession.  What is crucial now is whether the anticipated decline in overheads filters through into reality. After two years of soaring costs, the hope is now we can welcome a period of stabilisation.  We are an innovative and agile economy here in Yorkshire and we have what it takes to get back to meaningful growth.”

Martin Hathaway, managing director of Mid-Yorkshire Chamber of Commerce, whose results are also included in the report, said: “After another tough year for Yorkshire firms, I am really pleased to see the tide turning and lots of our key metrics improving over quarter one of 2024.

“Workforces are growing, investment is on the rise, and so are overseas and UK sales. Despite these promising results and inflation forecast to continue falling, firms are still struggling financially. Wages, raw material costs and utility costs were cited as key concerns this quarter for businesses across the Calderdale, Kirklees and Wakefield areas.”

Read the QES report here: https://wnychamber.co.uk/wp-content/uploads/2024/04/WNY-QES-Report-Q1-2024.pdf