Results of the Hull & Humber Chamber’s Quarterly Economic Survey come as no surprise by highlighting that this year’s Q2 was a challenging one for regional businesses, with most indicators in retreat as energy costs, inflation and interest rates all continued to rise.
Research by the Chamber highlighted difficult trading conditions across the board, with Home Sales and Orders and the export sectors all taking a pounding, with concerns over rising interest rates, pay settlements and raw material costs combining to contribute to a challenging business environment.
The Chamber’s QES reported Home Sales were down 42 points to 5, while Home Orders also tumbled, dropping 34 points to –3.
Export Sales tumbled 83 points to –50, while Export Orders mirrored the fall, dropping the same amount.
Employment in the last three months was also down, dropping 13 points to a balance figure of 0, while Employment Expectations for the next three months also dropped, but less dramatically, losing just 5 points as some businesses continue to struggle with recruiting staff, particularly in the hospitality sector.
Unsurprisingly, Cashflow in the last three months was also affected, dropping a further five points to –9, after a 60 point tumble in the first Quarter’s results.
Only 27 per cent of firms expect turnover to improve in the next quarter, while 25 per cent of firms expect it to decrease further, leaving a balance figure of 2, which represents a big drop from the figures seen in the last year of surveys.
The number of companies saying they were working at full capacity dropped by more than 25%, from 36% in the first quarter, to just 21% in this quarter, showing again the pressures local businesses are facing.
More than 70% of firms indicated that they are expecting to increase their prices in the next three months as the costs of raw materials and transportation costs rise, and for the second quarter in a row, no businesses said they were planning to reduce their pricing, but the balance figure was slightly down on that of Quarter 2 at 73 points.
With inflation predicted to peak at around 11% that was the biggest External Concern for Humber businesses, while competition and tax were also highlighted as issues. Business rates dropped a point, while fears over Interest Rates and Exchange Rates were also down slightly this time around.
The biggest pressure on prices this quarter was pay settlements, up 17 percent as employees seek larger pay rises in the face of rising costs across the board. Raw material costs were also highlighted, rising nine points higher than in the previous survey.
Concerns over the cost of finance were about the same as reported in the last survey, dropping just four points to a figure of 21%.
Investment in training fell to –9 points.
The Chamber’s External Affairs and Membership Director, David Hooper, said: “These results for Quarter 2 of 2022 clearly demonstrate that Humber businesses are facing pressure from almost every direction as energy costs, inflation, interest rates and staffing issues all continue to test our local business leaders.
“It all adds up to very difficult trading conditions across the board which are hitting business confidence as firms cut back on investment for the future as they try to cope with rising costs and soaring inflation.
“Inflated energy, petrol and diesel prices are all adding to the cost base for businesses and with supply chains still being affected by lockdowns in China and the war in Ukraine, these challenges are unlikely to subside for a while yet.”
