The following report uses data taken from the Quarterly Economic Survey carried out by the Chamber in the second quarter (Q2) of 2021. This regular survey asks businesses a series of questions on key economic indicators. The survey ran from 17/05/21 and 08/06/21.
In total, there were 405 responses. Of these, 34.0% can be broadly classified as Manufacturers. 59.0% can be broadly classified as Service Sector businesses. 7.0% are other. 42.0% of businesses employed fewer than 10 people. 32.0% employed 10-49 people. 21.0% employed 50-249 people. 5.0% employed over 250 people. 49.0% of businesses were active in international markets over the course of past quarter.
The unemployment rate reported by the Office for National Statistics (ONS) fell to 4.8% in the February to April period this year, down 0.4% compared to the previous three-month period and only 0.1% above the UK average. Youth (16-17 years) unemployment remains high at 31.3%. Nationally, the number of job vacancies in March to May this year was 758,000.
According to Bank of England's latest report, inflation is expected to rise to 2% later this year. Looking at the exchange rates, the vaccination programme is helping UK economy recover rapidly with GBP standing as strong as €1.16 in June. The latest data from Department for International Trade (Q4 2020) show exports valuing just above £5 billion from the East Midlands region.
*Net Value = Increase - Decrease
Compared to previous quarter, this quarter saw steep growth. The state of economy index value for the current quarter is 335.
Building on the recovery seen in Q1 2021, growth across Derbyshire, Nottinghamshire and Leicestershire – both in terms of activity and sentiment – continued to strengthen as the Government Roadmap for re-opening continued to progress across the quarter.
The State of the Economy Index – a measure of regional economic health – is now at a level not seen since Q3 2018. Domestic markets performed particularly strongly for both sales and orders, while overseas markets were stronger for advanced orders than in quarter sales.
Employment has also increased, with a net +20% seeing their workforces grow over the past 3 months and net +41% anticipating growth for the coming 3 months. Growing workforces is also seeing increasing difficulties in recruitment. 60% attempted to recruit in the quarter and, of those, 62% struggle to fill roles. These difficulties were particularly acute for skilled/professional jobs, but were also present across less skilled role types.
After a year of cashflow showing and overall deterioration for respondents, the quarter saw a net +7% improvement in cashflow, although 26% of respondents still reported this as worsening.
Pressure on prices is the biggest issue to watch, with net 49% anticipating increases in their prices over the coming quarter. The biggest pressure is coming from raw material prices (60%), particularly for manufacturers, but pressure is also coming from other overheads (42%), including energy costs, and pay pressures 18%.
Looking ahead to the next quarter, investment intentions continue to grow, for both plant/machinery/equipment (net +17%) and training (+23%) and overall sentiment for future improvements in turnover (net +62%) and profitability (net +41%) also trend upwards quarter-on-quarter.