Business sales and activity fell at the end of 2018 after a year of relatively steady performance, according to the East Midlands Chamber’s latest available data.
The slowdown resulted in overall business activity and sentiment across the region falling to a level not seen since immediately after the EU Referendum in 2016.
In the latter part of 2018, business sales and activity levels – both domestic and international – dropped markedly according to the results of the East Midlands Chamber’s fourth Quarterly Economic Survey of the year.
For the first time in many years, the survey showed a decline in sales to important export markets such as the Middle East and Africa. Firms trading with the EU saw the smallest growth since the Chamber’s records began 12 years ago.
Scott Knowles, Chief Executive at the Chamber, said: “An important difference between this slow down and that seen in mid-2016, is that two years ago it was very much about reduced confidence – particularly for a short period of time immediately after the referendum result, which surprised many.
“At the end of last year, longer-term confidence actually remained relatively robust. However, what we did see was a decline in tangible products and services leaving factories, offices and shops.
“We have to be a little bit careful about what this means. One swallow doesn’t make a summer and performance over coming quarters will be telling. However, we can say that the continued uncertainty around Brexit – and the imminence of the UK leaving the EU – is having a tangible impact on activity.”
Despite the drop in activity, businesses generally remained cautiously confident with regards longer-term prospects, with service sector and smaller firms in particular expressing greater confidence in their ability to succeed over the coming 12 months.
“Much like the public at large, there is no single consensus among our members in terms of preferred outcomes of the UK leaving the EU, but there is an almost universal frustration at the lack of progress, the lack of clear guidance on potential outcomes and seemingly petty point-scoring between politicians.
“It is essential that next week our politicians give us some kind of resolution – or failing that at least some clarity about the path towards a resolution – so businesses can get on with doing what they do best and planning for growth in the economy,” Scott added.
Key points of the survey included:
- The number of businesses suffering falling sales in overseas markets doubled in the period covered
- In the third quarter of 2018, eight per cent of firms said they’d seen orders fall while 36% said they’d improved and 56% reported no change
- By the fourth quarter, the firms reporting falling sales had risen to 17%
- Firms reporting improved sales dropped
- The net worsening was 12 percentage points from 28% to 16%
- The number of respondents reporting improved sales fell from 31% to 27%
- Those reporting no change increased from 58% to 59%
- Those reporting falling orders increased from 11% to 14%
- The net worsening was seven percentage points from 20% to 13%
- The service sector saw only a slight downward shift
- Manufacturing bore the brunt of the change, seeing a net fall in sales of 19 percentage points from 31% to 12% comparing Q3 with Q4 and a net decline in advance sales of 13 percentage points from 20% to seven per cent over the same periods.
- Comparing outcomes for domestic sales and advance orders showed declining confidence, as did scrutiny of other measures including
- staffing levels
- recruitment (except for professional and managerial positions), and
- investment intentions.