QUARTERLY ECONOMIC REVIEW REPRESENTATION QUARTERLY ECONOMIC REVIEW QUARTER 2 2017 Profile Savings Training Representation Protection International Trade In association with
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QUARTERLY
ECONOMIC REVIEW
REPRESENTATION
QUARTERLY
ECONOMIC REVIEW
QUARTER 2 2017
Profile Savings
Training
Representation
Protection
International Trade
In association with
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
REPORT SUMMARY The county’s services sector and manufacturers reveal a rise in UK orders and investment in training in
the latest Quarterly Economic Survey from Northamptonshire Chamber of Commerce.
The survey for Q2 2017 was conducted between May 22 and June 12 this year and contains responses from 80
businesses employing 3,031 people from across the county.
UK orders for both the manufacturing and services sectors rose during the quarter with the services sector seeing the
greatest increase up from 16% in Q1 to 32% in Q2. There was also further good news for the services sector which
reported an increase in their UK sales activity for the second consecutive quarter.
Encouragingly the manufacturing sector reported a sharp increase in their export sales – up from 14% in the previous
quarter to 40%. This is the highest figure reported by the sector for three years.
The services sector revealed its headcount grew during the quarter and although headcount figures for the
manufacturing sector decreased slightly they still remain at a high level. Manufacturers also indicated their hiring
intentions would rise during the next quarter.
Just over half of businesses within both sectors reported they had attempted to recruit staff during the quarter. Of those
businesses, 100% of manufacturers and 61% of service sector firms reported they had experienced difficulties recruiting
staff.
During the second quarter manufacturers reported a slight improvement in their cashflow and the services sector
reported a rise in investment in plant/machinery. Both sectors also revealed increases in investment for training during
the period.
When questioned 95% of service sector firms and 86% of manufacturers reported their turnover had either increased
or remained consistent with the first quarter.
Northamptonshire Chamber of Commerce chief executive Paul Griffiths said: “It is pleasing to see that the services
sector has experienced increases in UK sales activity and UK orders and that manufacturers have seen a sharp rise in
export sales.
“It is also encouraging to see firms trying to grow their businesses although the reports that some organisations have
experienced difficulties in recruiting staff is a concern. To help address this Northamptonshire Chamber has been running
a series of careers fairs this year to enable businesses to promote their sectors to young people across the county.”
Paul Griffiths, Chief Executive Northamptonshire Chamber of Commerce
Profile Savings
Training
Representation
Protection
International Trade
RESPONSES Northamptonshire Chamber of Commerce’s Quarterly Economic Survey (QES) is a regular independent business
survey and forms part of the biggest and most representative survey of its kind in the UK.
It is widely recognised as a key economic indicator by Government, The Bank of England and independent economists
alike. It also provides both central and local policymakers with an important source of feedback of the performance,
concerns and views of businesses across Northamptonshire.
The QES questionnaire covered ten broad sections;
The fieldwork for Northamptonshire Chamber of Commerce’s latest QES was conducted via electronic, hard copy
questionnaires and via Survey Monkey during the period 22nd May to 12th June. This report therefore sets out analysis
and interpretation of the findings for the second quarter of 2017. A total of 80 businesses, employing 3,031 people
from across the county responded. The sector split of respondents is shown in the pie chart below.
0%8%
26%
6%6%
4%0%
25%
7% 4% 3%11%
0%
Production
Manufacture Electronic /IT GoodsManufacture Other Goods
Construction
Transport /CommunicationRetailing / Wholesaling
Hotels / Catering
Professional Services
Marketing / Media
Consumer Services
Public / Voluntary Sector
Other Services
Unknown
UK Sales and Orders Activity
Export Sales and Orders Activity
Employment
Recruitment and Skills Shortages
Cashflow
Investment
Business Confidence
Capacity
Price Pressures
External Factors
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
UK SALES AND ORDERS As can be seen by the chart below, UK sales activity for those business operating across the services sector reported a slight increase, versus their counterparts in the manufacturing sector that reported a slight decrease. The overall balance figure for the manufacturing sector during Q2 2017 was 29% versus 35% recorded in Q1 2017. Conversely,
the services sector reported an overall balance figure of 35% in Q2 2017 in contrast to 29% recorded during the first
quarter of 2017. This represents the second consecutive quarterly increase in UK sales activity for the services sector, whereas for the manufacturing sector, the decline in UK Sales is the first recorded since Q3 2016. In contrast to UK sales figures, UK orders data for Q2 2017 saw both the manufacturing and services sector report an increase. The manufacturing sector saw a very slight in increase in UK orders, up from 27% in Q1 to 29% in Q2. The services sector reported a greater increase over the same time period, with their UK orders up from 16% in Q1 to
32% in Q2.
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or
increasing positions and those expecting worsening or decreasing ones.
(40)
(20)
0
20
40
60
80
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
UK SALES
Manufacturing Services
(20)
0
20
40
60
80
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
UK ORDERS
Manufacturing Services
Profile Savings
Training
Representation
Protection
International Trade
EXPORT SALES AND ORDERS There was a divergence in export sales during the second quarter between those businesses operating in the manufacturing sector and those operating in the services sector. The services sector cited that export activity had declined from 14% in Q1 to an overall balance of 0 – meaning that an equal number of firms stated that their export sales had increased as decreased. The manufacturing sector reported a sharp increase in export sales over the past
three months, up from 14% to 40%. This represents that highest figure for manufacturing sector since Q2 2014.
Export orders – an indication of future demand – for the services sector reported a sharp deterioration, from a balance figure of 18% to -17%. This minus figure represents a contraction in export activity for businesses operating across the services sector. This means that more services sector firms reported a decline in export orders versus those that reported an increase. The manufacturing sector reported a negligible fall in export orders from the first quarter, from 21% to 20%.
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.
(20)
0
20
40
60
80
100
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
EXPORT SALES
Manufacturing Services
(40)
(20)
0
20
40
60
80
100
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
EXPORT ORDERS
Manufacturing Services
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
EMPLOYMENT The manufacturing sector whilst reporting a slight decrease in their workforce during the second quarter was still at healthy levels with the overall balance figure reading 29%. In addition, the balance figure of 29% for the manufacturing sector represents a still historically high level – which can be seen by looking at the below chart.
Optimistically, the headcount of services sector firms reported an increase over the three months to June. The
balance figure for the first quarter was 11% in contrast to the second quarter which increased by 4% to 15%. Another optimistic note is that there has been a rise in hiring intentions for firms operating across the manufacturing sector, up from 17% in quarter 1 to 36% in quarter 2. In contrast to their counterparts in the manufacturing sector, the services sector actually stated that their hiring intentions would decline over the course of the next three months. Down from a reading of 39% in Q1 to 28% in Q2.
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.
(20)
(10)
0
10
20
30
40
50
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
Workforce - Last 3 Months
Manufacturing Services
0
10
20
30
40
50
60
70
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
Workforce - Next 3 Months
Manufacturing Services
Profile Savings
Training
Representation
Protection
International Trade
RECRUITMENT & SKILLS SHORTAGES Overall, the number of businesses attempting to recruit staff over the past three months across the services sector remained extremely consistent with the previous quarter. The overall balance figure for the services sector during the second quarter read 54% versus 56% during the first quarter.
On the other hand, the manufacturing sector reported a bigger decrease in the number of firms across the sector that indicated that they were attempting to recruit staff during the past three months – reading 50% in quarter 2 versus
55% in quarter 1.
Whilst 54% of services sector firms and 55% of manufacturing firms stated that they were attempting to recruit staff over past three months during the second quarter, a high percentage of those experienced difficulties in finding suitable staff. 100% of firms in the manufacturing sector that attempted to recruit staff over the past three months stated that they’d experienced difficulties in sourcing suitable staff. Whilst there was a slight drop in the number of firms in the services struggling to recruit staff, 61% said that they’d experienced recruitment difficulties in quarter 2 –
down from 76% in quarter 1.
0
20
40
60
80
100
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
%
Businesses Attempting to Recruit
Manufacturing Services
0
20
40
60
80
100
120
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
%
Businesses Experiencing Difficulties to Recruit
Manufacturing Services
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
The following table highlights the skills areas where businesses experienced difficulty in sourcing new employees during the quarter.
CASHFLOW & INVESTMENT During the second three months of 2017 the manufacturing sector reported a slight improvement in their cashflow with the overall balance figure reading 0, up from a reading of -4% during the first quarter of 2017 – meaning that the same number of firms reported an increase as those that reported a decrease. Conversely, the services reported a deterioration in cashflow during the second quarter, with a balance figure of 7% versus 20% in the first quarter.
0
2
4
6
8
10
12
14
16
18
20
Skilled Manual /Technical
Professional /Managerial
Clerical Un / Semi-Skilled
No
.
Skills Shortages
Manufacturing
Services
All Responses
(20)
(10)
0
10
20
30
40
50
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
Cashflow
Manufacturing Services
Profile Savings
Training
Representation
Protection
International Trade
Investment in plant and/or machinery for businesses operating across the manufacturing sector saw a decline during the second three months of 2017, down from 17% in quarter 1 to 7% in quarter 2. In contrast, the services sector reported an increase in investment in plant/machinery during the second quarter, up
from 5% in quarter 1 versus 19% in quarter 2.
The investment figure for training, both for the manufacturing and services sector improved during the second quarter of 2017 when compared to the first quarter of 2017. The manufacturing sector reported a balance figure of
21% for the latest quarter compared to 17% for the previous quarter representing a 4% improvement. Their counterparts in the services sector reported an even greater improvement of 10% compared with the Q1 2017 figure standing at 31% versus 21% for Q1 2017.
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.
(20)(10)
0102030405060
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
Investment - Plant & Machinery
Manufacturing Services
(20)
0
20
40
60
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
Investment - Training
Manufacturing Services
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
CONFIDENCE
43% of manufacturing firms cited that their turnover had increased with 43% stating that their confidence had remained consistent with the first quarter of 2017.
60% of service sector firms reported that confidence as measured by turnover had improved, with only 5% of firms citing a decrease in turnover during Q2 2017. 35% of service sector firms reported that turnover had remained consistent with the first quarter of 2017.
BUSINESS CONFIDENCE –TURNOVER
NEXT 12 MONTHS - NET BALANCES
% Balance Q2 - 2013
Q3 - 2013
Q4 - 2013
Q1 - 2014
Q2 - 2014
Q3 - 2014
Q4 - 2014
Q1 - 2015
Q2 - 2015
Manufacturing 50 68 71 74 79 74 69 60 44
Services 38 66 71 81 70 74 78 69 67
% Balance Q3 - 2015
Q4 - 2015
Q1 - 2016
Q2 - 2016
Q3 - 2016
Q4 2016
Q1 2017
Q2 2017
Manufacturing 61 44 52 37 46 48 64 29
Services 67 74 47 79 50 42 50 56
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.
0
20
40
60
80
100
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
CONFIDENCE - Turnover
Manufacturing Services
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International Trade
36% of manufacturing firms cited that their profitability had increased with 43% stating that their confidence had remained consistent with the first quarter of 2017.
53% of service sector firms reported that confidence as measured by profitability had improved, with only 6% of firms citing a decrease in turnover during Q1 2017.
40% of service sector firms reported that turnover had remained consistent with the first quarter of 2017.
BUSINESS CONFIDENCE – PROFITABILITY NEXT 12 MONTHS – NET BALANCES
% Balance Q2 - 2013
Q3 - 2013
Q4 - 2013
Q1 - 2014
Q2 - 2014
Q3 - 2014
Q4 - 2014
Q1 - 2015
Q2 - 2015
Manufacturing 32 47 50 65 67 59 55 45 33
Services 24 46 55 71 66 63 66 60 57
% Balance Q3 - 2015
Q4 - 2015
Q1 - 2016
Q2 - 2016
Q3 - 2016
Q4 2016
Q1 2017
Q2 2017
Manufacturing 42 8 36 32 23 24 35 14
Services 51 59 41 67 45 36 33 47
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.
0
20
40
60
80
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
CONFIDENCE - Profitablity
Manufacturing Services
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
CAPACITY The majority of businesses operating across both the manufacturing sector and services sector reported during the second quarter that they were operating below capacity – this was in contrast to the previous quarter.
43%
57%
CAPACITY - Manufacturing
Full Capacity Below Full Capacity
44%
56%
CAPACITY - Services
Full Capacity Below Full Capacity
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PRICE PRESSURES
In total 33% of businesses operating across the services sector reported increases in price pressures compared with 48% in Q1 2017, down 15%. On the other hand, manufacturing firms reported an increase in price pressures during the second quarter of 2017 at 79% versus 65% in the first quarter, an increase of 14%.
Overall across both sectors, other overheads i.e. energy costs were the main contributing factor to businesses increasing their prices during the first quarter. However, when looking at individual sectors, the manufacturing
sectors’ leading factor, creating pressure on prices was the cost of raw materials.
* Net (percentage) balances are the difference between the percentage of businesses that expect improving or increasing positions and those expecting worsening or decreasing ones.
0
20
40
60
80
100
Q2 -2013
Q3 -2013
Q4 -2013
Q1 -2014
Q2 -2014
Q3 -2014
Q4 -2014
Q1 -2015
Q2 -2015
Q3 -2015
Q4 -2015
Q1 -2016
Q2 -2016
Q3 -2016
Q42016
Q12017
Q22017
Net
% B
alan
ce
PRICE PRESSURES
Manufacturing Services
0
5
10
15
20
25
30
35
Pay Settlements Raw Materials Finance Costs Other Overheads
No
.
Pressure on Prices
Manufacturing
Services
All Responses
QUARTERLY ECONOMIC REVIEW QUARTER 2 2017
EXTERNAL FACTORS The main cause for concern for businesses during the second quarter was exchange rates which is not surprising
given the volatility of the pound during the first half of 2017.
During the second quarter of 2017 when surveyed, no businesses raised the issue of corporation tax as a concern for their business, which matches data recorded during the first quarter.
The leading external factor for the manufacturing sector when surveyed in the second quarter was exchange rates.
For the services sector it was competition amongst their peers.
0
5
10
15
20
25
30
No
.
External Factors of Concern
Manufacturing
Services
All Responses
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