YHCC: The road to recovery starts here
Friday, 23 Oct 2009
Yorkshire & Humber Chambers of Commerce President, Richard Wightman, explains why the Quarterly Economic Survey for the third quarter of the 2009 suggests Yorkshire is leading the way back towards growth:
"Businesses across the Yorkshire & Humber region are starting to bounce back from the most damaging recession in decades.
The recovery is fragile, patchy and its prospects are uncertain, but these figures are very clear evidence that the tide is turning. Confidence has continued to grow and this is now translating into improving sales and orders for many businesses.
It is even more positive that Yorkshire & Humber businesses, especially in service sectors, are leading the way towards recovery. Their levels of confidence are the highest in the country and with a welcome upturn in manufacturing indicators this quarter there is definitely a more positive outlook compared to the early months of 2009.
The mood has changed but there is absolutely no room for complacency. A sustained recovery is far from assured. The depth of the recession, combined with the significant risk to the upturn as stimulus packages and public spending taper off, means it will take some time to repair the damage suffered during the past two years. This will be especially true for employment which we still forecast will rise beyond three million sometime next year. There are many reasons why we shouldn’t take this recovery for granted, not least the fact that only a minority of businesses are actually growing. 32% of Yorkshire’s businesses said their sales increased this quarter, a rise of 10% since June. However, 33% are still reporting reduced sales. Whilst the situation is improving overall, the third of businesses reporting falling sales will hardly feel like celebrating.
The same set of statistics can always tell us different and often contradictory stories, never more so than in these results, so it’s worth trying to sum up what the evidence does, and crucially doesn't, tell us.
The figures do show a clear improvement from the position earlier in the year. More companies are increasing sales, order books are starting to fill up and cashflow worries are easing a little. Service sector confidence is higher in Yorkshire than elsewhere and manufacturing sales, orders and confidence have started to improve after taking a real battering over the past 18 months.
However, the results are improving from the lowest possible base of the first quarter of the year, and this survey measures relative trends quarter on quarter, not actual volumes. So the huge drop in activity earlier this year, when half of all businesses reported falling sales, means an improvement in the indicators was inevitable. We should not confuse improvement with growth. More companies are still reporting falling sales, exports, employment, cashflow and investment than the number reporting increases. So whilst the survey gives us genuine grounds for optimism, we are not yet out of the woods. More jobs and businesses will be lost even when we technically come out of recession, so political attention must be sustained in the recovery phase as it has been during the crisis phase.
Despite these reservations, it is worth reflecting on where we were just a year ago when any possibility of growth was too far into the distance to see. The change in mood means more businesses are moving from ‘survival mode’ to ‘opportunity seeking’ and this natural economic process is the best news the region can expect at this stage in the recession.
The road to recovery starts here."
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