The fragility in Suffolk’s economic recovery has been highlighted in the latest figures from Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) – although optimism is growing for a more prosperous future in the longer-term.
Covering the first three months of 2021, this QES shows that services companies have enjoyed a better quarter than their manufacturing equivalents, reversing the pattern from the previous two research periods.
However, almost universally the criteria measured by the survey remain both in negative territory (more firms reporting declines than reporting improvements) and noticeably below the levels from the same quarter in 2020, suggesting that a sustained economic recovery is still many months away.
Eight out of the 15 measures for manufacturing companies recorded falls, including a number of key indicators of current activity: cashflow, domestic sales and orders, export sales and recruitment.
Those reporting positive cashflow stood at -33% (down by 33 percentage points), with the balance of manufacturing firms reporting an increase in domestic sales falling by 34 percentage points to -13%. Domestic orders fell by 17 percentage points to -17%, export sales nudged down by five percentage points to 0% and those recruiting during the period in question fell by ten percentage points to +17%.
More encouragingly, Suffolk’s manufacturers reported quarter-on-quarter improvements in some forward-looking indices such as export orders, investment in plant and machinery, and turnover and profitability forecasts.
Companies experiencing an increase in export orders rose by 10 percentage to stand at 0%, whilst those reporting an increase in plant and machinery investment were up by eight percentage points to +22%.
There was a major uptick in those manufacturers expecting an increase in turnover during the next three months (up by 34 percentage points to +38), and a smaller boost in terms of profitability (up three percentage points to 0%).
By contrast, with the exception of export sales, which also saw a five percentage point fall, service companies reported improvements against all of these criteria.
The balance of service firms reporting an increase in domestic sales rose to +3 (a 12 percentage point rise compared with Q4 2020), and domestic orders were up by 17 percentage points to a balance of 0%, with the cashflow position of Suffolk service companies improved by four percentage points to -7%.
Export orders rose by 18 percentage points (-13%), investment in plant machinery was up by 21 percentage points to -10%, whilst service companies expecting an increase in turnover during the next three months increased (up by 25 percentage points to +43%), as did the figure for those expecting improvements in profitability (up 16 percentage points to 20%).
Based on these figures, Suffolk Chamber is repeating its calls for a longer-term government programme of business support, rather than the more immediate approaches currently being implemented through the Government’s Roadmap.
Paul Simon, Suffolk Chamber’s head of policy and communications, said: “Manufacturers had an especially challenging three months, with delays to supply chains caused by the ongoing disruption to post-Brexit trade weighing on the sector.
“Suffolk’s service sector overall had a better three months, but in effect there are two sides to this story. Consumer-focused services companies, where activity is most limited by lockdown controls, endured another challenging quarter. By contrast, business and professional services firms, where adapting to operate under restrictions is more straightforward, fared markedly better.
““The marked improvement in business confidence about the future has certainly been boosted in the first three months of 2021 amid the strong vaccine roll-out and the government’s roadmap providing some ability for companies to forward plan.
“However, the economic scarring from Covid-19 may mean that the recovery is dramatically uneven across different sectors, locations and cohorts of people. That is why Suffolk Chamber will continue to press our MPs and the government for a longer-term economic recovery and renewal plan covering the remainder of this Parliament.”
Suffolk Chamber is grateful to Suffolk Knowledge, part of Suffolk County Council, for providing the analysis of this QES.