Vital signs of growth for Lancashire businesses
– Businesses seeing an increase in domestic sales
– Lancashire firms showing prudency with investment plans
– Intention to recruit is improving
– Manufacturers looking outside Europe for export opportunities
Lancashire’s manufacturing firms have continued to build on the optimism shown at the end of 2011, according to the latest Quarterly Economic Survey compiled by the North & Western Lancashire Chamber of Commerce, in association with Moore and Smalley Chartered Accountants and Business Advisors.
Results for the first three months of the year show that 50% of manufacturing firms have seen an increase in UK sales, compared with 34% of service sector businesses. There was also an increase in the number of manufacturing companies expecting profitability and turnover to improve in the three months ahead, showing a slow return in business confidence.
Although there was positive news domestically, Lancashire’s exporters had mixed results this quarter. Despite a 5% increase in manufacturers reporting increased sales abroad, the same sector saw a 10% rise in firms experiencing declining export sales. This pattern was repeated in service industries.
Encouragingly, the businesses surveyed appear to recognise lower growth in European markets and are looking further afield for export opportunities. The Middle East (53%), the BRIC markets of Brazil, Russia, India and China (38%), the Far East (36%) and North and Central America (32%) were among the markets that companies were considering selling to over the next three months.
Employment in both sectors remained weak with fewer firms attempting to recruit staff in the first part of the year, although the prospects for the next quarter look more positive with fewer firms anticipating job cuts. The survey also revealed that nearly a third of all businesses expected to increase prices over the next three months, citing raw material costs as the most significant factor.
Commenting on the results, Steven Broomhead, Chair of the Lancashire Economic Commission said:
“There is evidence that business conditions are improving and that confidence is slowly creeping back. However, there is still an element of prudence as firms continue to hold back on their investment plans amidst uncertainty over rising business costs, not least of which is the increase in business rates set for April.
“Whilst the signs are encouraging for manufacturers, there is cause for concern in the service sector as consumer demand remains weak. The Government must look at ways of stimulating the economy whilst continuing to reduce the budget deficit.”
Stephen Gregson, corporate finance director at Moore and Smalley Chartered Accountants, a partner of the Quarterly Economic Survey, added: “The first quarter of any year is always tough, so it is encouraging to see businesses gritting their teeth and getting on with it despite the challenging economic conditions of recent months.
“The fact that businesses remain optimistic is a heartening sign and workforces appear to be stabilising with many of the companies surveyed intending to recruit staff in the next few months. Businesses are right to maintain a prudent approach though, particularly when it comes to monitoring cash flow. However, with inflation falling back and interest rates remaining low, businesses should begin to feel more comfortable about future investment”
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