High inflation continues to be a major concern for Humber businesses as another interest rate increase added to the challenges faced as 2022 closed.
Analysis by Hull and Humber Chamber of Commerce has found little in the way of good news to welcome in 2023, as its quarter four economic survey results were assessed.
Conducted in November, with many businesses hoping for a festive boost, the latest set of figures “paint a challenging picture for firms trying to keep their heads above water amid a rising tide of economic gloom,” external affairs director David Hooper said.
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“What the latest rise in Bank rates, and the arrival of the of the credit card bills in the first quarter of 2023 will do to the already hard pressed retail and hospitality sectors remains to be seen, but with the rising cost of living and energy crisis, things seem unlikely to improve in the coming months, as customers will be saving the pennies, instead of spending the pounds,” he said.
Research by the Hull & Humber Chamber of Commerce for Quarter Four revealed that home sales decreased by a further 5 points on the previous quarter to a balance figure of -13, while domestic orders fared slightly better, increasing slightly to -27, but remaining firmly in negative territory.
The export sector was slightly stronger this quarter, with both sales and orders climbing to a balance figure of -25, but again remaining in negative territory. The number of firms looking to increase their staff dropped from 11 points too, though more firms said they would retain their current staffing levels.
Mr Hooper said: “With the news dominated by people striking for more pay to help them cope with the rising cost of living, it’s hardly surprising that inflationary pressures are the biggest concern for Humber employers.
“With the highest interest rates we have seen for decades, and uncertainty around energy and raw material costs, not to mention supply chain issues, it is a difficult time for any business to plan ahead with any degree of certainty. Perhaps the only encouraging indicators are that some firms are pushing ahead with investment plans for the future and also restarting some of their training initiatives.
“We can only hope that the Bank of England’s predictions that inflation has just about peaked, will prove to be correct in the coming months, and business can then return to more normal trading conditions.”
Recruitment difficulties continue to be an issue for most firms, with management and unskilled or semi-skilled roles proving to be the most difficult to fill, closely followed by clerical positions. Finding skilled manual workers was less of an issue this quarter.
Firms reported that cashflow had improved by two points, compared to the last quarter, and more firms were planning to invest in new plant and machinery in the next three months. Investment in training had also recovered from the third quarter, improving by 32 points to a balance figure of 4.
Turnover expectations for the coming few months also improved, but the balance figure remained in negative territory.
Profit expectations for the next three months fell further this time around as firms continued to feel the economic squeeze, dropping to -55, the lowest figure of the year, while only a third of firms reported that they were working at full capacity.
More firms said they were planning to increase their prices in the next quarter, up 5 points on the last quarter to 67 per cent, while the biggest pressures on prices this time around focused on pay settlements and raw material costs and other overheads.
Interest rates and competition were the other biggest external concerns, while tax and exchange rates were less of an issue.
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