Chamber latest economic survey results

Christian Spence, head of research and policy at Greater Manchester Chamber of Commerce

The Greater Manchester economy continues to grow, but is beginning to slow according to the latest data from Greater Manchester Chamber of Commerce’s Quarterly Economic Survey (QES).

Quarter three’s survey was completed by almost 350 businesses, across a range of sectors, who were asked about their order books, investment and recruitment intentions and their confidence in the business climate going forward.

Results from manufacturers show that there is a contraction in growth for the first time since the first quarter of 2013, whereas construction sector growth is looking solid with employment growth close to a record high. The challenge for both manufacturers and construction firms is the ability to successfully fill vacancies, particularly as there is no clear policy on EU nationals working here now or in the future.

Commenting on the quarter three QES results, Christian Spence, head of research and policy at Greater Manchester Chamber of Commerce, said: “This is the first detailed survey of business confidence we have conducted since the EU referendum and the uncertainty caused by a lack of clear direction for the UK's future relationship with the EU is adding to an already existing slowdown in the UK economy. A weak manufacturing picture has turned into a slight contraction and confidence and investment levels are down across all sectors. Employment, usually a lagging indicator, remains positive at this stage, but we must watch the data over the coming months with care.

“Government must move as quickly as is feasible to set out its plan for negotiation with the EU and on what terms it expects its future relationship to be founded upon; no information is worse than having some clarity, even if that may change in the future. On issues such as rights for EU citizens to continue working in the UK, the government must move immediately and clarify their future position. Using employees of British-based firms as pawns in the negotiation strategy is highly disruptive to both those individuals and their employers and does not portray the UK in the open and globalised light which the Prime Ministers appears to want to deliver.”

The service sector continues to grow in Greater Manchester, albeit more slowly than the past few years, borne out by a weaker growth rate in sales. Survey results show that consumer-facing services are looking weaker than in quarter two, primarily the result of a slowdown in business services.

Paul Smith, Managing Director in the Debt Advisory practice at Duff & Phelps, commented on the results of the survey: “As SMEs in the Greater Manchester region work out what impact the result of the EU referendum will have on their businesses, it is encouraging to see that over the past three months the percentage of companies saying that they found it very hard or quite hard to access funding has fallen to 24% from 33%. A contributing factor for the rise in cash and funding options is the emergence of challenger banks, or alternative lenders such as peer-to-peer lenders, which have become more established as a source for funding among the business community. While this new and different range of funding options provides a welcome boost in liquidity, it is important that SMEs receive support and guidance to find the most appropriate funding structure for their businesses.

“Despite gloomy forecasts for export oriented businesses in the days following the referendum, the survey showed that 57% of exporters did not witness a change in international demand for their goods and services in the third quarter. However, importers have experienced an immediate impact on their businesses, as the fall of the value of Sterling post-referendum quickly eroded margins. On the upside, as UK products and services become more competitive, exporters should see a corresponding uptick in orders going forward.”