Quarterly Economic Survey - Q3 2024

Introduction

The following report uses data taken from the Quarterly Economic Survey carried out by the Chamber from 19/08/24 and 16/09/24 in the third quarter (Q3) of 2024. This regular survey asks businesses a series of questions on key economic indicators.

Summary

In total, there were 22 responses. Of these, 45.0% can be broadly classified as Manufacturers and 55.0% as Service Sector businesses.

Out of 22, 50.0% of respondents were micro, 32.0% were small and 18.0% were medium-sized businesses. Only 0.0% of respondents were large businesses.

45.0% of respondent businesses were active in international markets.

Results

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

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

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

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

During the last 3 months, has your labour force:

Over the next 3 months, do you expect your workforce to:

Have you attempted to recruit within the past three months?

If you have recruited over the past 3 months, did you experience any problems in finding suitable staff? ?

For which job types did you experience a problem: (latest quarter Q3 2024)

If you have recruited over the past 3 months, what type of positions were they: (latest quarter Q3 2024)

During the last 3 months, has your cash-flow:

Are you currently operating at:

Over the next 3 months, do you expect your prices to:

Is your business currently suffering pressures to raise its prices as a result of any of the following: (latest quarter Q3 2024)

What changes have you made to your investment plans for plant / machinery / equipment:

Over the past 3 months, what changes have you made to your investment plans for training:

Over the next 12 months do you expect your turnover to:

Over the next 12 months do you expect your profitability to:

Which of the following are more of a concern to your business than 3 months ago: (latest quarter Q3 2024)

Chamber Commentary

East Midlands economy demonstrates a landscape of cautious optimism tempered by significant challenges

The Q3 2024 business indicators reveal a mixed economic landscape, showcasing both areas of growth and signs of caution. This summary captures the key trends across domestic and overseas markets, employment, investment, and business confidence to provide a comprehensive understanding of the current environment.

Starting with the UK market, the data shows contrasting trends between sales and orders. UK Sales have experienced a 5% decline from 13% in Q2 to 8% in Q3, indicating a slowdown in domestic demand, possibly due to consumer caution or inflationary pressures. This decline, marked with a red indicator, suggests that businesses may need to adjust their strategies to maintain sales in the coming months. In contrast, UK Orders have increased by 3%, reaching 13% in Q3 from 10% in Q2, indicating potential future growth. This positive trend, marked green, suggests that there is still optimism among domestic clients, providing a potential avenue for businesses to capitalize on upcoming sales opportunities.

In terms of overseas performance, the indicators highlight more significant challenges. Overseas Sales have seen a substantial drop of 10%, falling from 13% to 3%, which could be due to a variety of factors such as exchange rate fluctuations, global economic uncertainties, or geopolitical issues. This red-marked decline suggests that export-oriented businesses might face difficulties in maintaining their international market share. Similarly, Overseas Orders have fallen by 3%, moving into negative territory at -1%, pointing to potential challenges in securing future international sales. These trends emphasize the need for businesses to diversify their export strategies and adapt to changing global market conditions.

The employment and labor force data present a nuanced picture. The Labour Force (Past 3 Months) has increased by 2%, from 7% to 9%, suggesting that companies are still actively hiring, indicating a degree of resilience and ongoing economic activity. However, expectations for the Workforce (Next 3 months) show a slight decline, dipping by 2% from 20% to 18%. This decrease, marked with a red indicator, signals growing caution among businesses regarding future hiring, likely due to uncertainties about future demand and the broader economic environment.

When examining investment and cash flow, the data reflects a trend toward reduced spending. Investment in Machinery has dropped sharply by 13%, from 16% in Q2 to just 3% in Q3, while Investment in Training also decreased by 5%, from 19% to 14%. These red indicators suggest that businesses are tightening their budgets, likely in response to economic uncertainties or to conserve cash flow amid concerns about profitability. Meanwhile, Cash Flow remains unchanged at -2%, highlighting ongoing liquidity challenges and limited improvements in financial flexibility.

Lastly, business confidence indicators provide insights into the overall sentiment. Confidence in Turnover has decreased by 3%, from 50% to 47%, reflecting concerns about revenue prospects and market conditions. However, Confidence in Profitability has shown a slight increase, up by 1% to 31%, indicating that some businesses remain optimistic about maintaining their profit margins despite external pressures. Additionally, Future Prices have seen a modest decrease from 32% to 29%, suggesting businesses may anticipate a more stable pricing environment or are adjusting their pricing strategies to remain competitive.

In conclusion, the Q3 2024 data presents a landscape of cautious optimism tempered by significant challenges, particularly in the overseas market and investment activities. While there are positive signs such as increased UK orders and stable profitability confidence, businesses face headwinds in terms of international sales and investment restraint. As they navigate this uncertain economic environment, companies will need to remain agile, focus on domestic opportunities, and manage cash flow carefully to sustain growth.