Liverpool & Sefton Chamber’s latest quarterly economic survey showed a relatively strong performance in the first quarter of this year but with tougher times to come. Tony McDonough reports
Liverpool city region firms in the manufacturing and service sectors expect turnover and profits to fall in the next 12 months in a study described as “stark” by Liverpool & Sefton Chamber chief executive Jenny Stewart.
However, businesses in the region are more upbeat on their intentions to keep investing.
The chamber’s latest quarterly economic survey (QES) showed a relatively strong performance in the first quarter of this year.
However, the performance level was lower than across the rest of the UK during the three-month period.
Shaky confidence
The survey showed business confidence for the forthcoming 12 months is higher than in the immediate post-referendum period but is substantially down on the peak confidence reported in 2013-15.
And is significantly down on the previous surveyed quarter with expectations of -20% and -15% in manufacturing turnover and profitability and -13% and -9% in the service sector.
In the manufacturing sector, the balance of firms reporting an increase in domestic sales increased from +12% to +33%, and orders increased from +8% to +33%.
However, export sales reduced from +20% to +17% but orders increased from +25% to +27%.
Service sector businesses reported a substantial improvement in cashflow from a negative position (-1%) in Q4 of 2016 to +15% in this quarter. Manufacturing businesses reported an increase from +8% to +13%.
Positive trends
Ms Stewart said: “These results are indicative of the precarious nature of the economy in post-referendum Britain.
“There are some positive trends to the results which indicate continued expansion of the economy but the indices around business confidence for the coming 12 months are stark.
“The calling of the snap General Election, occurring after the completion of this survey work, is unlikely to increase the optimism within the business community in the short term.”
Intention to invest
Despite national data indicating improving confidence but limited investment intentions, the Liverpool city region data indicates the opposite effect.
It showed intention to invest in equipment and training in manufacturing sector businesses up 20 and 24 percentage points compared to the previous quarter, suggesting an intention to invest to grow.
Service sector investment in training is to be reduced, a concern given the introduction of apprenticeship reform requiring a co-investment payment from businesses for the training of apprentices.
Ms Stewart added: “While there are impediments to economic growth, including the difficulties accessing suitably skilled staff, increasing inflationary pressures and taxation complexity, there are indications that businesses are recruiting and investing to grow and prosper in these uncertain times.”