QES Q2 Results: Business survey underlines case for Government infrastructure boost in county

Newly-released Suffolk business data covering the last three months of the previous Government suggest a steadily improving trading picture, albeit with some specific setbacks.

Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for the period April to June 2024 showed positive corrections compared with previous quarters’ declines in most key activity indices for manufacturers, with domestic sales, export sales and export orders all on an upward trajectory. Even the slight decline in domestic orders was insufficient to take that measure into negative territory (ie more respondents reporting declines than increases).

Domestic sales stood at +28%, domestic orders at +6%, export sales at +45% and export orders at +18%.

And although some service sector measurements by contrast fell in the three months under scrutiny, especially export sales (down by 38 percentage points) and orders (down by 46 percentage points, overall the trading conditions for Suffolk firms look at their most benign for 18 months.

Service sector cashflow balances saw little change over the last three months and remain close to neutral. The often-volatile local manufacturing cashflow balance rebounded sharply with a 50 percentage point increase, returning to positive territory in the process (+17%).

The local investment balances saw a welcome improvement in the quarter and all are now in positive territory, indicating that more respondents are intending to increase their investment than those that are planning to scale it back. Confidence in turnover is healthier than confidence in profitability across the board.

Once again, more businesses in the county took on new employees than those that reduced their staffing levels in the second quarters, and this is expected to continue into the coming quarter. At the same time, Suffolk firms are also finding it slightly easier to recruit the right staff, after years of struggling with persistent labour and skills shortages.

Concern over inflation increased in the second quarter and remains the primary issue for Suffolk businesses, with 57% of firms seeing this as a worry. Despite this, intentions to raise prices among Suffolk respondents fell sharply in in the second quarter, with the percentage of Suffolk manufacturers intending to raise their prices is at its lowest level since the fourth quarter of 2020.

By contrast, concern over competition and corporate taxation hit multi-quarter highs.

Matt Moss, Suffolk Chamber’s Economy Group chair, said: “these are certainly encouraging figures, not least as our earlier concerns about a two-speed economy opening up have lessened somewhat.

“Nonetheless, it’s clear that all is still nowhere near perfect, with the recovery remaining fragile in many cases. Therefore, it is vital that the new Government ensures that their policies instil a long-term confidence in business decision-makers, which is why Suffolk Chamber is backing calls for an Industrial Strategy Bill in the forthcoming King’s Speech that gives businesses greater certainty on the direction of travel and places investment in innovation at its core.”

Paul Simon, Suffolk Chamber’s head of public affairs, added: “A key role of Government in undergirding long-term confidence is to address systemic market failures and so invest in growth-unlocking infrastructure that releases entrepreneurial talents and risk-taking.

“The conclusion from this latest Quarterly Economic Survey is that the importance of the ‘diggers in the ground’ effect has never been more needed. We, therefore, urge the new administration in Westminster to confirm investment in the Ely and Haughley rail junctions, give a significant boost to the rollout of 5G infrastructure in the county and start the process of addressing the ongoing resilience issues impacting the strategic roads network out of the Port of Felixstowe and around Ipswich as a matter of urgency.”

Suffolk Chamber is grateful to Suffolk Knowledge, part of Suffolk County Council, for providing the analysis of this QES.