New survey shows Yorkshire tops business confidence league table
Tuesday, 13 Oct 2009
New research shows that businesses in Yorkshire & Humber are leading the UK out of recession with the region topping the key business confidence league table and suggesting the economy is on the ‘brink of recovery’.
Yorkshire & Humber’s service sector, which accounts for the bulk of the regions jobs and economic output, is more confident than places such as London, the South East and North West. 55% of the firms surveyed said they now expected their profitability to improve in the coming months. This figure has more than doubled since the start of the year and the net balance of +34, which takes into the account the 21% expecting profits to fall, means Yorkshire’s service firms are the most confident in the country and 21% above the UK average. Confidence in manufacturing sectors also started to improve by 22% but the region has slipped one ranking place to 5th.
The findings come from a new survey published today by the Chambers of Commerce in Yorkshire & Humber. The Quarterly Economic Survey for the period between July and September 2009 uses data from 795 businesses in Yorkshire & Humber and over 5000 nationally.
The more positive mood reported by many businesses is now starting to translate to harder economic indicators such as sales, orders, cashflow and investment. Despite these welcome improvements in all of the survey indicators, including in manufacturing sectors for the first time since the start of the recession, more businesses than not are still reporting falling levels sales, employment and investment. However, the figures are a welcome sign of improvement and strongly suggest that economic growth will return before the end of the year.
The overview for the third quarter of 2009 is as follows:
- The number of businesses in the region reporting increased home sales is up from 22% to 32%, but with 33% still reporting falling sales, the figures are not yet evidence of an overall return to growth.
- The immediate outlook for jobs was not particularly positive. Despite a small rise the number of firms increasing the size of their workforce, the number cutting jobs has not improved since the previous quarter. With only 28% of businesses operating at full capacity, it will take longer for employment to recover.
- Service sectors report stronger results overall, but there has been some welcome improvement in a range of manufacturing indicators. 25% of manufacturers reported stronger export sales (up 11%), there was an 18% fall in the number cutting investment and there was a 32% increase in the proportion of firms expecting to grow turnover.
- With service sector business confidence stronger in Yorkshire than any other part of the country, it is businesses in places such as Doncaster and Mid-Yorkshire who are most optimistic within the region. Bradford firms reported the biggest increase in confidence since the second quarter. Manufacturing confidence levels improved in all parts of the region.
Indicators generally remain weak and are improving from a low base, however the survey does report a significant change in mood over the summer which should give grounds for optimism that growth will return by the end of the year.
Director of Policy for Yorkshire and Humber Chambers of Commerce, Nick Pontone, commented:
“This is clear evidence not only that a modest recovery is starting but that businesses in Yorkshire & Humber are leading the way. The service sectors have driven our growth for many years and their more positive outlook is a precursor to future growth. There is definitely a change of mood but this should not yet be confused with a return to economic growth. The economy is off life support but remains in intensive care where it may stay for some time yet.”
“Despite the welcome news, no one should be under any illusions about the difficulties many companies still face. More companies are still experiencing falling sales and cutting jobs than the number growing them. The legacy of the recession will be felt long after it officially ends.”
Commenting on the national results which put the UK on the ‘brink of recovery’, BCC Director General, David Frost, said:
“The most encouraging feature of these results is that confidence has strengthened dramatically in both manufacturing and services. In the face of huge challenges, British businesses are showing resilience.
“It is vital that the government now demonstrates a clear determination to support wealth-creating firms. Unless business confidence is nurtured and allowed to drive the economy out of recession, the country’s recovery will be stunted, and we will face a risk of a double-dip recession.
“Despite the toughest spending climate in decades, the government must protect infrastructure investment and avoid placing additional tax burdens on business. A moratorium on new employment laws is needed, and crucially, the planned increase in National Insurance contributions in 2011 must be scrapped.
“The private sector cannot be seen as the quick cash remedy for the poor state of the nation’s finances. The deficit will have to be brought down by making tough choices on spending cuts in the public sector, including a freeze on pay and recruitment across the board.”
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