The latest North East England Chamber of Commerce’s economic survey results show a worrying continuation of downward trends with business uncertainty a major issue.
Conducted in association with Durham University Business School, the research shows sales continue to be below previous record lows, set in 2009, for both the manufacturing and service sectors. The survey, which produces a balance score across a range of business indicators, saw domestic sales for manufacturers at -40.6 points and -35.6 points for the service sector, with export sales greatly reduced to -25.5 and -24.1 points respectively.
This is the second economic survey the Chamber has conducted since the onset of the Covid-19 pandemic and the figures continue to lay bare the impact this crisis is having on the regional economy.
Lesley Moody, Chamber President (AES Digital) said: “While there are some signs of increased positivity in these results, the overall level of business confidence remains low.Large parts of our business community report a highly uncertain outlook.Sectors such as retail, leisure and hospitality continue to face the twin challenges of public health restrictions and low levels of consumer confidence. Following recent Government announcements, the months ahead look extremely difficult for these businesses without further support.
“Other sectors are faring better, either through adaptation to new ways of working or by operating in markets that are more ‘Covid-proof’. Yet we must not forget the harm to business resilience and balance sheets that has been caused over recent months.
“We have been extremely vocal about the need for Government to get on with its ‘levelling up’ agenda. Large parts of our region are among the worst hit by infection rates and local restrictions, having entered this crisis with above average levels of unemployment and inequality. These survey results only add weight to the argument that urgent action is needed to prevent these disparities growing further.”
Barriers which caused difficulties for businesses also included an increased level of uncertainty around Brexit with concerns about the type of deal with the EU and the potential paperwork and barriers which may result.
There were some areas where businesses reported success mainly relating to the ability to adapt to challenging circumstances and included investment in marketing and advertising, rapid transition to home/remote working and exploration of different markets.
Commenting on the survey, Chamber member and current holder of the Chartered Institute of Public Relations’ Outstanding Small Agency Award, Karol Marketing’s manging director Stefan Lepkowski said, “After the initial shock of lockdown, many businesses have woken up to the fact that they are now operating in a very different market and one full of opportunities to do things differently.
“Normally in a recession the first thing to get cut is the marketing budget but business can no longer rely on the old ways of doing things. For the moment, the days of door knocking salesmen, exhibitions, corporate hospitality and networking as a way of doing business are gone. We are finding that clients, old and new, are keen to ramp up PR, brand building and digital marketing activity to get the message out.
“Understandably, the biggest barrier to getting on with things is the uncertainty. But increasingly, judging by our new business pipeline, there is a realisation that simply sitting it out, hoping things will better, is not an option.
“I think our sector is doing well because COVID-19 has meant that in looking ahead we all need to be creative and, creativity is what we do best.”
Image: Stefan Lepkowski, Managing Director - Karol Marketing
Full details of the report are available here.
The Chamber Economic Survey results are generally presented as balance figures - the percentage of firms that reported an increase minus the percentage that reported a decrease. If the figure is above 0, it indicates overall expansion of activity and if the figure is below 0, it indicates overall contraction of activity. For example, if 50% of firms told us their sales increased and 18% said their sales decreased, the balance for the quarter would be +32% (an overall expansion). If 32% told us their sales increased and 33% said their sales decreased, the balance would be -1% (an overall contraction).