Quarterly Economic Survey - Q2 2024

Introduction

The following report uses data taken from the Quarterly Economic Survey carried out by the Chamber from 13/05/24 and 10/06/24 in the second quarter (Q2) of 2024. This regular survey asks businesses a series of questions on key economic indicators.

Summary

In total, there were 322 responses. Of these, 36.0% can be broadly classified as Manufacturers and 64.0% as Service Sector businesses.

Out of 322, 36.0% of respondents were micro, 34.0% were small and 23.0% were medium-sized businesses. 7.0% of respondents were large businesses.

42.0% of respondent businesses were active in international markets.

Wider Economic Context

The unemployment rate for East Midlands reported by the Office for National Statistics (ONS) increased by 0.1% compared to the previous three-month (October to December 2023) period to 5.4% in the February to April 2024 period. Youth (16-17 years) unemployment increased from 20.8% to 26% over same time period of February to April 2024. Nationally, the number of job vacancies for the period of March to May 2024 was 904,000 showing a further fall in the number of vacancies by 12,000 from December 2023 to February 2024. This was 23rd consecutive decline in number of job vacancies with number decreasing in 9 out of 18 industry sectors.

According to Bank of England’s latest Monetary Policy report, higher interest rates are reducing inflation. The Bank of England is not at the stage of cutting interest rates and expects inflation to come down to 2%. Looking at the exchange rates, the GBP stands at €1.17 in June’24 – €0.01 higher than in March’24. The latest data from Department for International Trade (Q4 2023) show exports valuing £7.28 billion from the East Midlands region.

Region at a Glance

*Net Value = Increase - Decrease

IndicatorsNet Value - Q1 2024Net Value - Q2 2024Net change over quarterDirection of changeUK Sales10 %13 %3 %🟢UK Orders4 %10 %6 %🟢Overseas Sales3 %13 %10 %🟢Overseas Orders-11 %2 %13 %🟢Labour Force (Past 3 Months)9 %7 %-2 %🔴Cash Flow-5 %-2 %3 %🟢Workforce (Next 3 months)23 %20 %-3 %🔴Investment in Machinery6 %16 %10 %🟢Investment in Training15 %19 %4 %🟢Confidence Turnover47 %50 %3 %🟢Confidence Profitability23 %30 %7 %🟢Future Prices40 %32 %8 %🟢

State of Economy Index

Compared to previous quarter, the current quarter saw slight growth in the state of economy index. The value for second quarter of 2024 is 178.

Q2 2013Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019Q4 2019Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024−400−2000200400
QuarterState of Economy Value

Results

For businesses involved in the UK market, looking at the past 3 months (excluding seasonal variations), has your activity/sales/custom: (trend over 4 quarters)

262526213435363440403845Q3 2023Q4 2023Q1 2024Q2 202420%25%30%35%40%45%
ResponsesDecreasedIncreasedRemained Constant

For businesses involved in the UK market, for the next 3 months (excluding seasonal variations), have orders/advanced custom/bookings: (trend over 4 quarters)

242925202824293049474551Q3 2023Q4 2023Q1 2024Q2 202420%25%30%35%40%45%50%
ResponsesDecreasedIncreasedRemained Constant

For businesses involved in overseas markets, over the past 3 months (excluding seasonal variations), has your activity/sales/custom: (trend over 4 quarters)

282825182325283150474751Q3 2023Q4 2023Q1 2024Q2 202420%25%30%35%40%45%50%
ResponsesDecreasedIncreasedRemained Constant

For businesses involved in overseas markets, for the next 3 months (excluding seasonal variations) have orders/advanced custom/bookings: (trend over 4 quarters)

232929212723182350475456Q3 2023Q4 2023Q1 2024Q2 202420%25%30%35%40%45%50%55%
ResponsesDecreasedIncreasedRemained Constant

During the last 3 months, has your labour force: (trend over 4 quarters)

111714162624232363606260Q3 2023Q4 2023Q1 2024Q2 202410%20%30%40%50%60%
ResponsesDecreasedIncreasedRemained Constant

Over the next 3 months, do you expect your workforce to: (trend over 4 quarters)

1110872727312762626166Q3 2023Q4 2023Q1 2024Q2 202410%20%30%40%50%60%70%
ResponsesDecreaseIncreaseRemain Constant

Have you attempted to recruit within the past three months? (trend over 4 quarters)

4245524558554855Q3 2023Q4 2023Q1 2024Q2 202445%50%55%
ResponsesNoYes

If you have recruited over the past 3 months, did you experience any problems in finding suitable staff? (trend over 4 quarters)?

3328363467726466Q3 2023Q4 2023Q1 2024Q2 202430%40%50%60%70%
ResponsesNoYes

For which job types did you experience a problem: (latest quarter Q2 2024)

184360310102030405060ClericalUnskilled/Semi-skilledProfessional/ManagerialSkilled Manual/Technical
Number of businesses

If you have recruited over the past 3 months, what type of positions were they: (latest quarter Q2 2024)

140478130020406080100120140TemporaryPart-timePermanentFull-time
Number of businesses

During the last 3 months, has your cash-flow: (trend over 4 quarters)

273332272626272547414148Q3 2023Q4 2023Q1 2024Q2 202425%30%35%40%45%
ResponsesDecreasedIncreasedRemained Constant

Are you currently operating at: (trend over 4 quarters)

7370696727303133Q3 2023Q4 2023Q1 2024Q2 202430%40%50%60%70%
ResponsesBelow Full CapacityFull Capacity

Over the next 3 months, do you expect your prices to: (trend over 4 quarters)

33213040423367565666Q3 2023Q4 2023Q1 2024Q2 20240%10%20%30%40%50%60%70%
ResponsesDecreaseIncreaseRemain The Same

Is your business currently suffering pressures to raise its prices as a result of any of the following: (trend over 4 quarters)

0%20%40%60%80%100%UtilitiesRaw materialsOther overheadsLabour costsFuelFinance costs
QuarterQ3 2023Q4 2023Q1 2024Q2 2024

What changes have you made to your investment plans for plant / machinery / equipment: (trend over 4 quarters)

70626468141815816202124Q3 2023Q4 2023Q1 2024Q2 202410%20%30%40%50%60%70%
ResponsesRemained The SameRevised DownwardsRevised Upwards

Over the past 3 months, what changes have you made to your investment plans for training: (trend over 4 quarters)

6863677012129520252424Q3 2023Q4 2023Q1 2024Q2 202410%20%30%40%50%60%70%
ResponsesRemained The SameRevised DownwardsRevised Upwards

Over the next 12 months do you expect your turnover to: (trend over 4 quarters)

53565959302829321716129Q3 2023Q4 2023Q1 2024Q2 202410%20%30%40%50%60%
ResponsesImproveRemain The SameWorsen

Over the next 12 months do you expect your profitability to: (trend over 4 quarters)

424145473232333626272217Q3 2023Q4 2023Q1 2024Q2 202415%20%25%30%35%40%45%
ResponsesImproveRemain The SameWorsen

Which of the following are more of a concern to your business than 3 months ago: (latest quarter Q2 2024)

94609872379961020406080100Exchange RatesBusiness RatesInterest RatesCorporate TaxationAccess to skilled labourCompetitionInflation
Number of businesses

Chamber Commentary

East Midlands economy demonstrates increasing strength as year progresses

The Chamber’s economic survey results for the second quarter of the year make for positive reading, with one small blemish with regards to workforce numbers in businesses. Of particular encouragement are results relating to sales and orders – both in the UK and overseas – which saw strong gains from the start of the year, demonstrating a growing demand from businesses and customers for the products and services coming out of the region. This was accompanied by strong upturns in investment intentions, particularly so when respondents were asked to consider investment in plant and machinery, demonstrating a growing confidence about future prospects, a confidence that was further underlined when businesses were asked about prospects for turnover and profit over the coming year, with a net 50% expecting turnover to improve (up from 47% last quarter) and 30% profitability (up from 23%).

After two consecutive quarters of businesses planning to increase prices, there was a noted drop in businesses reporting pressures on prices, down from 40% at the start of the year expecting to increase prices in coming months to one-third. When considering specific drivers of price increases – fuel, staffing costs, energy prices and raw materials – all of these fell quarter-on-quarter.

The only data bucking the positive trend relates to the labour market where, mirroring national employment figures, there was a quarter-on-quarter decrease in those that saw their labour force grow over the past few months or expect to see it grow in the coming quarter. While 55% of businesses attempted to recruit in the quarter (an increase on last quarter), two-thirds of those struggled to find the right candidates.

In other areas, there was an improvement in cashflow, with the net score for those reporting changes in cashflow almost back into positive territory after a year of a deteriorating situation, and a continued trend of reduced capacity in businesses as they get busier – although with enough headroom remaining to avoid any potential inflationary pressures from continued demand.

Finally, in a sign that health is continuing to return after a difficult two-years, when asked to report on growing concerns almost an identical number of respondents cited ‘competition’ as those that cited ‘inflation’ – competition being a sign of a well-functioning economy.

Taken together the results suggests that the resilience demonstrated by the regional economy over what has been a disruptive two-years is now morphing into growth, with a good level of confidence for continued growth over the remainder of the year.