British Chambers of Commerce Quarterly Economic Survey for Q4 2016 shows sustained uptick
The BCC has published its Quarterly Economic Survey.
The BCC has published its Quarterly Economic Survey. The results of the survey are taken from 7,250 responses, from firms questioned between 7-28 November 2016, and show the upward growth trend has been sustained in the final quarter of 2016. Dr Adam Marshall, Director General of BCC said: ‘businesses are continuing to trade through the uncertainty, and are looking to seize opportunities as they arise’. The number of service sector firms expecting growth has increased from the number that was seen in the aftermath of the EU referendum and ‘overall…findings suggest growth with continue… albeit at a more modest pace’.
Following a slower growth trend in Q3 2016, Q4 showed a slight rebound in domestic sales and orders however levels have not yet returned to those historically recorded. Suren Thiru, Head of Economics at the BCC states: ‘the service sector is likely to have been the key driver of growth in the quarter’. Some manufacturers may be benefitting from the fall in Sterling, with export sales and orders remaining at the increased levels that were seen in Q3. Additionally Q4 has seen an increase in confidence in future turnover, hiring expectations and investment in plant and machinery for both manufacturing and services firms. The survey found that although there has been continued growth, albeit at a slower pace, firms in both sectors are facing pressure to raise prices.
The key findings of the Q4 2016 survey were that:
- There was a considerable rise in the balance of firms in both sectors expecting the prices of their goods and services to increase over the next three months. The balance for manufacturers rose from +31% to +52% whilst service firms increased from +20% to +30%. Figures are the highest on record in the manufacturing sector and the highest since Q1 2011 for service firms.
- The balance of firms, in the manufacturing sector, reporting improved export sales remained fairly consistent. Figures slightly decreased from +17% in Q3 2016 to +16% in Q4. Export orders fell from +13% to +12%, however in the long run both balances are up from +1% in the same quarter last year.
- The manufacturing sector saw improved domestic sales rising to +15% from +13% with those reporting increased advance orders staying at the +7% level previously reported. Service firms saw a slight rebound after a large drop in Q3 with domestic sales up from +9% to +15% and orders rising from +8% to +13%.
- Unfortunately recruitment difficulties increased drastically from 64% to 76% in the manufacturing sector. However in the last three months, the balance of manufacturers hiring more staff rose from +15% to +23% whilst figures in the service industry rose from +14% to +16%.
- Both firms have seen higher investment in plant and machinery, with a significant rise from +8% to +19% in the manufacturing sector.
- There has been increased confidence that turnover will increase reported in both firms. Manufacturers rose from +36% to +43% while services increased from +28% to +35%. Confidence in profitability rose from +15% to +21% in the services sector. Although confidence in general across the two areas is still relatively low in comparison to results over the past three years.