Northamptonshire economy grows at a slower pace in Q1 2016, says QES survey

Paul Griffiths, Chief Executive of Northamptonshire Chamber.

The Northamptonshire economy grew at a slower pace in the first quarter of 2016 with many businesses facing recruitment challenges, according to the latest survey by Northamptonshire Chamber of Commerce.

Despite the findings from The Quarterly Economic Survey (QES) for Q1 2016, business confidence remains at healthy levels. The QES published on 11 April 2016 contains responses from 76 businesses employing 2,538 people in the county.

It showed between January and March this year, 87.5% (a fall of 8.5% on Q4 2015) of service sector firms and 58% (a fall of 22% on Q4 2015) of manufacturing firms reported that UK sales had remained consistent or increased when compared to Q4 2015. Meanwhile UK orders for businesses operating in both sectors remained consistent with figures recorded in the fourth quarter.

In contrast to the overseas market, there was a revival in export sales for those firms operating in the service sector with 20% reporting a rise. Meanwhile 83% of manufacturing businesses stated that sales during this period had either remained consistent with the previous quarter or had increased.

Turning to employment, the results represent the third consecutive quarter of decline in firms’ hiring intentions. From the responses, 28% of manufacturing firms reported attempts to recruit staff against 52% for service sector firms in the first three months of 2016. Of those businesses that reported attempts to recruit staff, 100% of the manufacturing sector and two-thirds (68%) of the service-based firms said that they experienced difficulties in finding suitable staff.

Investment in plant and/or machinery for businesses operating across both manufacturing and services sectors slowed during the first quarter of 2016 along with investment in training.

Contrary to the investment figures stated for businesses operating across the manufacturing sector, confidence increased in the first quarter. The findings reveal that 100% of manufacturers stated that confidence as measured by turnover had increased or remained consistent with Q4 2015. In the service sector the figure was 84%.

Other overheads (e.g. energy costs) were the main price pressure for businesses with competition cited as the main cause for concern. In the manufacturing sector, exchange rates were cited as a second external factor of concern.

Paul Griffiths, Chief Executive of Northamptonshire Chamber, said: “Based on our key indicators, this latest survey suggests the local economy grew at a slower pace in the first quarter of 2016, which is reflected at a national level by our colleagues at The British Chambers.

“It is concerning to see that businesses in Northamptonshire, in particular manufacturers, facing recruitment issues and reporting a fall in investment. The Chamber will be monitoring this to see if this is a continuing trend. Despite this, business confidence still remains at strong levels.

“It is also positive to see the service sector performing well overseas however we would like this export revival replicated for our manufacturers. This is why we need further support from the Government to encourage exports which in turn leads to increased business and inward investment and job creation.”