Latest Suffolk business sentiment: worries rise as outlook worsens
Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for October to December 2022 has shown a continuing decline in key measures of business activity, albeit with some specific improvements in evidence to lighten the overall gloomy trading picture for the county.
Once again, the vast majority of the business indicators measured by the QES fell compared with the figures for the same indices in the previous quarter.
Most worryingly, the key confidence balances such as cashflow, investment in plant & machinery, profitability and turnover saw significant falls for the fourth consecutive quarter in Suffolk.
Manufacturers appear to be bearing the brunt of the current economic contraction with cashflow at -4% (more companies reporting declines than increases), investment in plant & machinery (-19%), profitability (-46%) and turnover (-18%).
Service companies recorded across the board declines against each of these measures, although starting from a higher base, most still remain in positive territory, although this is not the case for either cashflow (-6%) or profitability (-7%)
Once again, inflation remains of concern to more than 8 in 10 Suffolk respondents, though there was a slight improvement in the fourth quarter of 2022, compared to the previous three months. That said, output inflation pressures continue to build with the majority of businesses still expecting their prices to increase in response to these sustained inflationary pressures.
Furthermore, the percentage of businesses concerned about other non-inflationary factors increased, and the overall level of concern is at its highest point since the second quarter of 2017.
Concern over corporate taxation spiked by 24 percentage points and is now the second most identified factor among Suffolk businesses. As interest rates continue to rise, so do the business worries as to their impact. Almost half of Suffolk respondents now see interest rates as a factor of concern.
Export sales and orders continue to languish with the balances for both manufacturers and service companies firmly in negative territory, although there was something of a recovery from the latter compared with the low point achieved in the third quarter. The Suffolk service sector export sales balance has now been in negative territory for 13 of the past 18 quarters, while the equivalent orders balance has only escaped negative territory in four of the past 21 quarters.
There was slightly better news recorded regarding domestic sales and orders, with modest quarter-on-quarter increases reported by manufacturers and a small increase in orders experienced by service firms.
Paul Simon, head of public affairs & strategic communications at Suffolk Chamber commented: “The picture painted by these survey results is not a particularly edifying one. In spite of their best endeavours, Suffolk firms are now caught in a mesh of squeezed margins, reduced investment and a declining confidence in being able to deliver their growth plans over the next year or so.
“The speed and durability of our county’s recovery from what is demonstrably a trading recession will partly depend upon how the Government helps businesses to cope with continuing price rises.
“That is why it is essential that the revised Energy Bill Relief Scheme (EBRS), which we were expecting to see before Christmas, is applicable to as wide a range of firms as possible and at current rates.”
“Capping energy costs for a further reasonable period of time will allow management teams and business owners to reconfigure their plans and ensure the ongoing declines in cashflow, investment, profitability and turnover are arrested before they show through as significant increases in business failures and job losses.”
Suffolk Chamber is writing to the county’s seven MPs asking them to support a largely unchanged EBRS for at least the next 12 months or explain which sectors in Suffolk they believe should be prioritised.
Suffolk Chamber is grateful to Suffolk Knowledge, part of Suffolk County Council, for providing the analysis of this QES.