Sales and confidence remain strong, but external pressures look set to challenge many
Demand remains strong across the region but many firms are struggling to keep pace as supply challenges hold back order fulfilment. This is the view from Chambers of Commerce in West & North Yorkshire, as the two business organisations report the findings of their latest Quarterly Economic Survey (QES).
Domestic sales across services held up following the surge witnessed in quarter 1, and whilst the pace of growth slowed for manufacturers, overall the data is positive.
However, the availability and cost of raw material is cited by manufacturers as a problem as are haulage and shipping disruptions, largely down to Covid, Brexit and driver shortages. Wider labour shortages are also a problem for many firms with two thirds of service sector and 80% of manufacturers reporting recruitment difficulties in the last quarter.
Additional bureaucracy, border delays and transportation costs continue to cause problems for 1 in 2 manufacturers exporting to the EU; although this is down from the same period in Q1 of this year as companies adjust to new and additional trade procedures.
Amanda Beresford, Chair of West & North Yorkshire Chamber of Commerce, said of the results:
“It’s pleasing to know that many of our businesses are now facing growing demand for their goods and services. Of course, it’s not so pleasing that they are now facing further challenges as they attempt to meet that demand. Rising input costs and inflationary pressures are expected to be short term, but will challenge company cash flows in the interim period as balance sheets recover from the economic crisis.
On employment and recruitment, the survey findings chime with national data showing job vacancies at their highest recorded level. Recruitment, however, remains tough in the current ‘candidate-led market’ which exists right now
“Despite the challenges business confidence remains strong as companies look to 2022.”
Martin Hathaway, MD of Mid-Yorkshire Chamber of Commerce said, “I am delighted to see growth in our region’s domestic sales as we push forward with our Covid-19 recovery. This is testament to the true Yorkshire spirit that is embodied by our region’s business community.
“While growth figures are looking promising, ongoing supply chain issues and struggles to trade overseas are still being faced by many here in Yorkshire and across the UK.
“Firms are still being impacted by the fall-out from Brexit, compounded by the more recent issues experienced by operators that rely on HGV transport.
“Longer term solutions are needed to ensure we can future proof our operations and supply chains should further restrictions be needed over the winter months.”
Sir Roger Marsh OBE DL, Chair of the Leeds City Region Enterprise Partnership and NP11, said, “It is encouraging to see that the sectors most badly affected by the pandemic are bouncing back in Quarter 3. Domestic demand has continued to grow and this is reflected in increased orders and sales in the service sector and robust performance by B2C sectors including hospitality and retail.
“The re-opening of the economy has swept away remaining caution among local firms, prompting an intensification of recruitment activity and a rebound in investment to pre-pandemic levels. The strengthening of the labour market is reflected in recruitment intentions in the manufacturing sector which reached record levels in the lifetime of this survey, and strong growth in service sector jobs. It is therefore to be hoped that the end of the furlough scheme will not prove to be too disruptive in this improving job market. “