Survey highlights challenges for manufacturers

16 Jul 2018

Business

Findings from the most recent Quarterly Economic Survey showed a worrying second quarter for manufacturers in St Helens with the number reporting to be operating at full capacity halving from that of the first quarter, to just 20%.

Sales have moved into a negative territory after the positive rebound that was seen in the first quarter of 2018. This slow-down looks set to continue over the summer period with advance orders showing no movement.

Manufacturing employment faltered at -3%, although the picture is looking more positive for service firms. Looking ahead one fifth of manufacturers and 13% of service firms plan on growing staffing levels over the next quarter.

On a more positive note, the service sector is reporting an increase in business and this is likely to continue with advanced orders increasing to 9% from just 2% in the first quarter.

Other key findings include:

  • Plans to invest in plant and machinery and training have fallen into negative territory for manufacturers, with confidence over increasing turnover down to 12% compared to 43% last quarter.
  • Manufacturing firms confidence about profitability is marginally positive, but service sector firms feel more confident at +25%
  • Manufacturing respondents are increasingly concerned about exchange rates, with service respondents citing competition as their main concern over the last three months.
  • In both sectors there is pressure to raise prices with raw material prices being a significant pressure for nearly 90% of businesses.
  • 6% of manufacturers reported improved export sales which was down from 44% in Q1.
  • 37% of service firms have reported improved export sales in Q2, up from 33% in Q1.

Tracy Mawson, Deputy Chief Executive at St Helens Chamber, commented: “The noted downturn in manufacturing results from quarter one is concerning, and something we will be closely monitoring.

“Almost half of local manufacturers export, so growing international uncertainty from escalating trade disputes to oil prices are undoubtedly a factor in this.

“Businesses need clarity on Brexit to enable them to navigate the turbulence of the next few years. Bold action is now needed from the Government to give businesses the confidence to invest and speed up the pace of growth.

“The recent issuing of the Brexit white paper will start to address some issues, but it has taken two years to get this far, and two years of uncertainty is too long for businesses who are trying to grow.”