Signs of ‘two-tier’ growth, as services race ahead of manufacturing
The results of the latest Quarterly Economic Survey (QES) from the Chamber of Commerce have revealed a further slowdown in the Lancashire economy during the second quarter of 2015.
The new survey, compiled by the county’s three Chambers in association with Moore and Smalley Chartered Accountants and Business Advisors, shows that most key economic balances have remained static or worsened, with the manufacturing sector having a particularly disappointing three months.
The only exceptions to the general pattern of lower balances in Q2 was the rise in service sector domestic sales and orders, giving further evidence that consumer spending continues to be the main driver of the UK recovery.
However, despite the general slowdown in Q2, the survey also found a high level of confidence that turnover and profitability will improve over the coming year; and there are also signs that firms intend to increase investment. There was further good news on inflation, with fewer firms intending to increase prices in the next three months.
Commenting on the results, Babs Murphy, Chief Executive of the North & Western Lancashire Chamber, said:
“The Q2 results highlight some major challenges facing Lancashire businesses. Perhaps uncertainty caused by the general election campaign had some impact on recruitment and investment decisions in Q2. However, continuing problems in the Eurozone, along with slower economic growth in the USA and China, are undoubtedly giving exporters cause for concern.
“It is clear that the UK recovery remains unbalanced and growth is still too reliant on consumer spending. While a healthy consumer sector is vital, much greater efforts are needed to increase the economic contributions of investment and exports – which, in turn, will boost our productivity and help tackle the unsustainable external deficit. The results in this survey suggest that the trade gap could widen even further in Q2.”
Stephen Gregson, Corporate Finance Director at Moore and Smalley, added:
“This quarter’s results seem to suggest a weakening on the prior quarter and a year ago. I say ‘suggest’ as we have to remember that the survey is more of a ‘straw in the wind’ as opposed to a thermometer and don’t forget either that we have been here before over the last few years.
“The QES results have tended to follow an up and down profile over time. I think that this is to be expected as the UK and the rest of the world, especially our key trading partners, continue to feel the continued aftershocks of the worldwide recession.
“I would advise very strongly against both being too cock a hoop when we have a strong set of quarterly results – but also don’t be too pessimistic if they have weakened a little. To a degree, we appear to be in an era of ‘ebbs and flows’ in the QES and other economic indicators and this may well be the new normal.”
To read the full survey report, please click here.