Doncaster Chamber – Quarterly Economic Survey: Results of the 3rd Quarter 2008
Doncaster Chamber – Quarterly Economic Survey: Results of the 3rd Quarter 2008
Background
The Quarterly Economic Survey was distributed to all businesses in Chamber membership with 130 members, 12%, responding. The results are compiled through the British Chamber network and used by the Treasury Committee of the Bank of England to help determine interest rates. Consequently the results of the survey are of key importance to all members.
Key Points
The key points arising from the Quarterly Economic Survey for Doncaster are as follows:
Business confidence in Doncaster is dramatically down again. Only 22% of Doncaster businesses now expect profitability to improve in the next three months compared with 44% in the previous quarter and 68% just over a year ago. Cashflow has also worsened for Doncaster businesses for the fourth successive quarter.
Only 26% of businesses reported an increase in UK sales in this quarter compared with 42% in the previous quarter; export sales are also down for Doncaster businesses.
21% of Doncaster businesses reported that they had been forced to lay off staff in the second quarter of 2008 with this number now outstripping the number of Doncaster businesses, 18%, who have increased their workforce.
Training budgets are also being cut with 36% of Doncaster businesses reducing their investment in training compared with only 6% six months ago.
UK Sales
In the last three months sales have increased for 26% of all businesses, remained constant for 36% of businesses and decreased for 38% of businesses. In the previous last quarter 42% of business recorded an increase in sales making the drop in business confidence this quarter quite dramatic. Advanced orders have increased for 25% of businesses, remained constant for 33%, and dipped for the remaining 42% of businesses compared with 39% of businesses reporting a decrease in advance sales in the second quarter of 2008.
21% of manufacturers reported an increase in sales, 36% reported that sales had remained constant, and 43% reported a decrease in sales compared with 36% of manufacturers in the second quarter of 2008. Further reductions in UK sales demonstrate that the economic slowdown is now having a sustained impact on Doncaster businesses.
Export Sales
Export sales have increased in the last three months for only 14% of businesses compared with 18% in the second quarter of 2008 and 36% in the first quarter; export sales remained constant for 43% of businesses with 43% businesses reporting a decrease in export sales compared with 18% in the previous quarter. Advanced export orders have increased for 14% of businesses, remained constant for 39% and decreased for 46% of businesses; this compares with a decrease for only 5% of businesses in the first quarter of 2008 and 17% in the second quarter. No manufacturing businesses reported an increase in export sales or advance export sales, thus completing a gloomy picture for exporters in Doncaster.
Employment
Over the last three months 18% of businesses have increased their workforce, for 61% it has remained constant, with 21% of businesses reducing their workforce, this compares with 20% in the previous quarter and reflects a sustained increase over the last year in the number of Doncaster businesses reducing their workforce. Worryingly this is the first time that the number of businesses losing staff has outstripped the number of businesses taking staff on. In the next three months 17% of businesses expect to recruit staff, 66% of businesses expect their workforce to remain constant and 17% expect to lose staff; these figures are consistent with the previous quarter.
28% of manufacturing businesses have lost staff in the last three months with a similar number expecting to reduce their workforce in the next quarter.
42% of businesses have tried to recruit staff in the last three months. 67% of these were for full time posts and 65% were for permanent positions. This reflects a 10% increase in the number of part time posts being advertised from the previous quarter reflecting different employment patterns as the economic downturn influences recruitment policies.
70% of those businesses trying to recruit staff encountered difficulties when doing so. Where difficulties did occur it was in relation to the following types of jobs: Skilled
Manual/Technical – 31%, Professional/Managerial – 26%, Clerical – 17% and Semi/Unskilled – 19%.
Cashflow
Over the last three months cashflow improved for 22% of businesses, down from 26% in the previous quarter, 34% in the first quarter of 2008 and 40% in the final quarter of 2007. Cashflow has remained the same for 39% of businesses and worsened for 39% of businesses. For the manufacturing sector 29% of businesses had experienced an improvement in cashflow this last three months and 39% experiencing a worsening compared with only 33% in the previous quarter.
Investment
In the last three months 19% of businesses increased their investment in new machinery/equipment, for 42% this has remained constant, whilst 38% have decreased their
investment in machinery/equipment; these figures are broadly similar to those for the previous quarter.
Investment plans for training have improved in the last three months for 20% of businesses, remained the same for 44% and decreased for 36% compared with 26% in the previous quarter and only 6% in the quarter prior to that. This reflects a demonstrable and sustained reduction in training spend for Doncaster businesses over the last twelve months.
Business Confidence
Business confidence is significantly down again with only 22% of businesses expecting profitability to increase compared with 44% in the previous quarter. Just over a year ago this figure was at 68%. 59% of businesses expect profitability to fall in the next three months compared with 34% in the last quarter. 32% of business expect turnover to improve, 18% expect it to stay the same and 50% expect it to worsen. Confidence in the manufacturing sector is higher with 43% expecting profitability to improve in the next three months.
Capacity
29% of businesses are operating at full capacity with 71% operating below capacity, these figures had been consistent recently, however this quarter demonstrates a slight reduction in the number of businesses operating at capacity down from 36% in the second quarter of 2008.
Prices
36% of businesses expect their prices to increase in the next three months down from 51% in the previous quarter, 58% expect them to remain constant and 6% of businesses are predicting a decrease in prices. Within the manufacturing industry 27% of businesses expect prices to increase with 55% expecting them to remain constant and 18% expecting them to decrease. This is marked change from the previous quarter when 68% of manufacturing businesses expected prices to increase.
Businesses are currently experiencing the following price pressures, (businesses could respond to more than one option): Pay Settlements – 22%, Raw Material Prices – 48%, Finance Costs – 30% and Other Overheads – 52%. These figures are broadly consistent with recent results other than an 8% increase in the number of businesses experiencing increased financial costs.
For the manufacturing industry figures were as follows: Pay Settlements – 38%, Raw Material Prices – 79%, Financial Costs – 24%, and Other Overheads – 48%.
External Pressures
Businesses were asked to identify what external factors were of concern to them, 47% cited interest rates, 20% cited exchange rates, 23% cited business rates, 35% cited inflation, 34% cited competition and 71% cited corporate taxation as the biggest concern; of these interest rates demonstrates the biggest jump from 33% in the previous quarter to 47% in this one.
For the manufacturing sector the breakdown was as follows: Interest Rates – 52%, Exchange Rates – 28%, Business Rates – 17%, Inflation – 52%, Competition – 24%, and Corporate Taxation – 69%.
For further information on the Quarterly Economic Survey please contact Daniel Fell, Head of Policy, on 01302 640113 or dfell@doncaster-chamber.co.uk.