Suffolk business survey: mixed results suggest county’s businesses are in ‘yo-yo’ mode
134 firms from Suffolk completed the latest survey, with 41 from the manufacturing sector and 93 in services.
There have been declines compared with the previous quarter in 11 of the 30 main indices recorded by the QES, with 17 notching up improvements. Two criteria showed no change in the balance between firms reporting positive and negative data.
Suffolk businesses, on the whole, once again remain more robust than the East of England average where no fewer than 16 of the 30 criteria saw declines compared with the third quarter of the year.
The figures from Suffolk seem also to be better than those for the UK as a whole, where manufacturing data is at its weakest for some time and service sector activity and sentiment has faltered from the previous quarter.
Overall, Suffolk’s service companies recorded a stronger last quarter in 2019 than previously, with improved data across a majority of criteria, with especially pronounced improvements in confidence in improving profitability, turnover and growth in services employment.
However, there were also worrying further declines in export sales and cashflow. The latter is regarded as a key indicator of the health of businesses.
Suffolk manufacturers recorded further improvements in domestic sales and orders from lows earlier in 2019 but fell back – considerably so – in terms of overseas sales and orders and cashflow.
A majority of the overall criteria are still in positive territory, meaning that more businesses are reporting increases than those recording decreases, albeit by smaller margins.
Paul Simon, Suffolk Chamber’s head of communications and campaigns, said “in effect, over the last year or so Suffolk businesses have been in a yo-yo mode: going up and down at regular intervals, but with no longer-term upwards momentum.
“In some quarters manufacturers seem to be doing well, only to fall back during the next three months. Equally, as with these results, having taken an earlier pounding, service companies then rally for a while – quite possibly before falling back again.
“It would be too simplistic to ascribe all of the uncertainty surrounding Brexit and our longer-term relationship with the European Union (EU) as being the sole cause for this yo-yoing effect, not least given the other headwinds affecting global trade.
“However, it is to be hoped that with the UK scheduled to leave the EU on 31 January, further clarity will mean that more companies will feel able to deliver their long-term growth plans than have been able to date.
“Appropriate assistance from government – including securing a trade deal with the EU - would certainly be welcome in helping to accelerate these plans by smoothing out any further turbulence.”
Suffolk Chamber through its Brexit Business Adviser programme continues to help Suffolk businesses navigate the Brexit process, articulate business asks in a future UK EU trade deal and identify opportunities for trading opportunities elsewhere across the world. The Brexit Business Advisers can be contacted on: (01473) 694803.
It is also backing calls from its national body, the British Chambers of Commerce (BCC) for a programme of measures aimed at helping small and medium enterprises (SMEs) maintain their cashflow. This includes a Brexit Finance Guarantee scheme to facilitate business finance to SMEs that are viable but unable to obtain finance due to exceeding their lenders’ risk appetite due to significant exposure to a potential no deal Brexit.
In addition the BCC is advocating a Brexit SME tax relief scheme for one year to support SMEs who need to undertake activity as a consequence of no-deal related disruption and a one -year reduction in business rates for those with a low rateable value.
Suffolk Chamber is also calling on the government to help unlock the long-term growth potential in the county by delivering on a number of key infrastructure projects including those to Suffolk’s road network, including upgrades to seven pinch points along the A14, its rail network, including at Haughley Junction and others such as the Third Lothing Crossing in Lowestoft.
The key headlines from the survey are:
The balance of manufacturing firms reporting an increase in domestic sales rose from -3% to +20%, and fell -2% to -6% for those in services
The balance of manufacturing firms reporting an increase in domestic orders rose from -6% to +5%, and rose -20% to -15% for those in services
The balance of manufacturing firms reporting an increase in overseas sales fell from +7% to -7%, and fell from +5% to -15% for those in services
The balance of manufacturing firms reporting an increase in overseas orders fell from 0% to -17%, whilst those in services were unchanged at -13%
The balance of manufacturing firms reporting an increase in employment was fell from +18% to +16%, but rose from +4% to +10% for those in services
The balance of manufacturing firms anticipating a future increase in employment fell from +11% to +10%, but rose from +5% to +10% for those in services
The balance of manufacturing firms projecting an increase in turnover fell from +24% to +15%, with those in services rising from +2% to +14%
The balance of manufacturing firms projecting an increase in profitability was unchanged at +5%, with those in services rising from -10% to +8%
The balance of manufacturing firms projecting an increase in cashflow fell from +19% to -3%, with those in services falling from -14% to -19%
Suffolk Chamber is grateful to Suffolk Knowledge, part of Suffolk County Council, for providing the analysis of this QES.