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UK demand grows but government must prioritise economic stability, says Chamber
STRONG domestic demand was a key factor in the growth of the Northamptonshire economy in the second quarter of 2016, according to a survey by Northamptonshire Chamber of Commerce.
The Quarterly Economic Survey report for the three months to June published today (July 12) shows 84% of manufacturers reported an increase or consistent UK sales, with 89% of service sector businesses experiencing the same demand. Firms from both sectors also reported steady increases in UK orders.
However it was a different picture for firms trading overseas. Service sector firms experienced a decline in export sales and orders, despite an upturn in activity between January to March. This was echoed by manufacturers which reported that export sales activity had slowed down.
The Chamber has called on the government to act swiftly and decisively to restore stability to the economy.
Chief executive Paul Griffiths (pictured) said: “Strong domestic sales has been a key factor in creating a stable local economy and to stable job creation in Northamptonshire. However the fall in investment decisions reinforced the uncertainty felt by businesses in the run-up to the referendum on Britain’s continued membership of the European Union.
“The government needs to make economic stability and political clarity as its immediate priority. It must outline its next steps on exiting the EU following the electorate’s Brexit vote.
“Any prolonged period of uncertainty will affect confidence, investment, hiring and growth during the coming transition period. We all need to fully support our firms to ensure we get Britain back to business.”
Hiring trends for businesses operating across the manufacturing sector reversed their downward trajectory reported during the previous two quarters. About a third of services and manufacturing firms surveyed stated their workforce had increased during the second quarter.
These findings mirror the decline from 100% to 44% of manufacturers expressing recruitment difficulties during Q2. In contrast, the services sector experienced a greater degree of difficulty in recruiting of staff with 70% citing this as an issue.
While cashflow has improved for manufacturing firms over the previous three months, investment activity for plant and machinery and in training slowed during the second quarter - continuing the downward trend since Q4 2015.
Conversely, a third of service sector firms reported an increase in investment plans and a further 65% stated plant and machinery investment remained consistent with the first quarter.
Competition was cited as the main external factor of concern for businesses during Q2. Exchange rates was viewed as the second external factor of concern by manufacturers with business rates highlighted by service firms.
Businesses in Northamptonshire remained positive with 95% of manufacturing firms and 94% of services sector businesses citing profitability had increased or remained the same when compared with Q1 2016.
Meanwhile 79% of service sector reported an increase in turnover with 37% of manufacturing firms reporting an increase in profitability.
The report for Q2 2016 was conducted between May 23 and June 13 and contains responses from 79 businesses employing 1,904 people across the county.
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