More Challenging Times for Businesses Across the Sheffield City Region

16th July 2018

Quarterly Economic Review shows a decline in business confidence relating to expectations of profitability over the next 12 months.

These are more challenging times for businesses across the Sheffield City Region, according to the latest results of the Quarterly Economic Review, and reflecting wider testing macroeconomic conditions. Key business challenges for manufacturing and service sector firms include competition, inflation, business rates and exchange rates. The results, published by the region's four Chambers of Commerce, show that over the last three months, sales balances for manufacturing firms have remained solid but declined for service sector firms. Fewer businesses report working at full capacity, with declining sentiment around investment in training also evident amongst both manufacturers and service sector firms. Looking forward, results in relation to firms' order books are only marginally improving in the case of manufacturers, and have declined for service sector firms, compared to the previous quarter. Declining business confidence in relation to expected profitability over the next 12 months is also found amongst both manufacturers and service sector firms, for service sector firms these are at their lowest levels for at least three years. International trading firms across the region reported a similar picture. Indeed, sales balances for exporting service sector firms over the past three months show a decline in sales. Exporting manufacturers particularly indicated exchange rates as a key challenge to business. However the situation is not entirely downbeat. -Most balances remain positive, albeit often less strongly positive compared to previous quarters. There is also some indication that price increases and inflation may be slowing, whilst on balance firms in both sectors report quite robust cash flows says Dr David Littlewood, Sheffield University Management School. -Interestingly when businesses were questioned, in early June, about key business challenges, Brexit and political uncertainty did not feature highly; the Q3 survey will show if this continues to be the case. The survey also questioned firms about workforce health and wellbeing. Results showed that in general, they have not identified any change in employee sickness levels during the last three years, but less than half have any formalised staff wellness programmes. There was some recognition of the link between staff wellness and productivity, and over half showed a willingness to invest in employee wellness in the future. Says Richard Wright, executive director, Sheffield Chamber of Commerce: -These are challenging times for business but we at the Chambers are still seeing lots of member businesses thriving. The Chambers and Sheffield City Region Business Growth Hub are working alongside manufacturing and service firms, large and small, to offer business support and signpost them to a large number of opportunity areas including funding. The results of the Quarterly Economic Review - run by the Sheffield City Region's four Chambers of Commerce, with the support of the Local Enterprise Partnership, Growth Hub and Sheffield University Management School are used to keep abreast of current business sentiment and influence decision makers accordingly. The review is part of a national survey coordinated by the British Chambers of Commerce to act as an economic indicator for the Bank of England and to advise Whitehall. The next survey for Q3 2018 is open to all Sheffield City Region firms to participate from 27 August to 17 September. For further information visit: https://screconomy.org.uk/