Wednesday, July 18, 2018

News: More challenging times for SCR businesses

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The results of the Quarterly Economic Survey for the Sheffield City Region (SCR) in the second quarter of 2018 indicate that these are more challenging times for businesses across the City Region, 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 across the SCR have remained solid, but have declined for service sector firms. Looking forward, firms' order books follow a similar pattern, with overall positive balances reported in both sectors, but at a declining level compared to the previous quarter amongst service firms. Business confidence figures are down from the previous quarter for both sectors, but particularly amongst service sectors firms with historically low sentiment in relation to expected profitability in the next twelve months.

A lower percentage of firms also indicate that they are operating at full capacity, whilst balances relating to investment in training are down for both sectors.

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Dr. David Littlewood, lecturer in Strategic Management at Sheffield University Management School, said: "These difficulties seem to be particularly afflicting service sector firms, who identify key challenges of growing competition, inflation, as well as high business rates. Key challenges identified by manufacturers are exchange rates, and again competition.

"However, the situation is not entirely downbeat. It must be noted that overall most balances remain positive. There is also some indication that price rises may be slowing, whilst firms in both sectors on balance report quite robust cash flows.

"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 results for exporting firms largely align with those for all firms in the Sheffield City Region. The sales balance for exporting service sector firms for the quarter was negative, indicating declining sales. The key challenges identified by exporters are also largely similar to those reported by all firms, albeit exchange rate issues are identified more strongly.

The hot topic for this quarter is workforce health and wellbeing. The results of the survey questions on this topic indicate that firms in general have not identified any change in employee sickness levels during the last three years, but less than half of them have any formalised staff wellness programmes. There is some recognition of the link between staff wellness and productivity, and also willingness to invest in future employee wellness activities.

The Quarterly Economic Survey, run by the British Chambers, is the country's biggest and longest- running private sector survey. It acts as an economic indicator and often highlights underlying trends in the economy long before other surveys or other official statistics pick them up.

SCR Economy website

Images: SCR Economy

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