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Investment Up as North East Business Optimism Continues

 

The 2013 business bounceback continues, with firms across the region investing more than at any time since 2007.

The 2013 business bounceback continues, with firms across the region investing more than at any time since 2007.
The North East Chamber of Commerce today launches its Quarterly Economic Survey. The third report of the year clearly demonstrates the upwards economic trend established in quarters one and two has been carried into the second half of the year.

NECC members have reported the highest rise in in business investment since 2007 and the largest increase in staff training investment since 2008.

This spike in investment follows last quarter's survey, which returned the best scores on sales, orders, workforce and investment since before the recession started with results consistent across both the manufacturing and the service sector.

The QES, produced in partnership with Barclays, is a trends survey that shows the health and direction of the North East economy. Measured across 11 separate indicators, any score above zero indicates trading conditions are improving.
The report demonstrates that while sales and orders levels could not maintain the lofty levels of last quarter, both remain in positive territory.

NECC Director of Policy, Ross Smith, said: "It is great news to see an upward trend being established in the 2013 QES surveys. Each quarter we are seeing significant growth in key areas and these results suggest that the regional bounceback from the economic downturn continues to be led by our businesses.

"It is heartening to see last quarter's best set of results in five years backed up by another good period. The pattern of the scores is a little different this quarter with sales and orders growth slowing, but manufacturers continue to grow exports more quickly, while service businesses have shown stronger growth in domestic markets.

"Confidence is apparent in growth in investment plans, with scores at a six year peak on the back of strong service sector investment. Plant and training investment growth over recent quarters has been caveated with a reminder that this is coming from a low base, but with four consecutive quarters of growth in plant investment, this seems to be becoming more significant."

Current and future workforce scores remain static from the previous QES, continuing a pattern of steadily improving growth seen in the last two-and-a-half years, which augurs well for the labour market after a difficult early 2013. However, other parts of the economy, including the public sector, are not performing as well. Recruitment is stable on the quarter, and up on last year.

Brian Foreman, Head of Barclays Mid-Corporate Banking Team, said: "The strong scores for investment really stand out this quarter, mirroring what we are seeing at Barclays, where lending numbers are strong year on year, largely down to capital expenditure. Firms are much leaner after using the last few years to recalibrate. During that process, a lot of investment plans were mothballed. That left a lot of pent up demand which is now starting to flow through.

"What is even more encouraging is that firms are also taking decisions on strategic investment in production lines, buildings or workforce, and some of these are quite bold. Sometimes where there is just a lot of pent up demand you get a sudden spike, but our pipeline is as strong as it has been for at least five years."

Almost all key indicators in the survey remain in positive territory for the year, although quarterly growth has slowed somewhat on sales and orders following last quarter's spike.

In the last two years Utilitywise plc, one of the UK's leading utility management consultancies has invested heavily in the North East. In January 2012 it moved into a new HQ in South Shields and began a period of rapid growth. Staff numbers at this office have more than doubled and include a 50 strong French-speaking team selling gas into France, as well as a team of German-speakers selling into Germany. Utilitywise has just announced its move into the Irish market.

Chief Operating Officer, Adam Thompson, said: "During the recession we helped many businesses take control of their power consumption, not only looking at how their tariff was structured but also giving them the tools and advice to help them lower their energy consumption.

"We have now brought water services into the mix. Our water experts look at everything from bill rebates to leak detection to help companies get the most value out of the water they use."

The Quarter 3 QES includes a comparison between Local Enterprise Partnership areas that demonstrates businesses in the north of the region are seeing more growth in sales and orders both at home and overseas.

The indicators also show that businesses in the Tees Valley area remain more optimistic about future turnover and profitability, prices of goods and are less optimistic about future workforce recruitment.

Below is a summary of the QES indicators: