NORTH WEST BUSINESSES POSITIVE DESPITE TOUGH CONDITIONS

24/10/2006

Tough global competition, rising costs, and tight margins, are worrying North West manufacturers. But, in spite of these pressures businesses are fairly positive about the economy, according to the latest survey of the region's businesses.

More than 1,150 companies responded to the Chambers of Commerce North West's Quarterly Economic Survey.

For both service providers and manufacturers, domestic sales and orders are at their highest levels for some considerable time.

Sam Jones, Chairman of the Economic Committee of Chambers of Commerce North West, said: “Whilst the results of this Quarter's Survey are not as buoyant as those of the previous quarter, the strength and diversity of the North West economy continue to deliver a robust performance. Conditions for businesses continue to be challenging, particularly for manufacturers who are nevertheless coping well with strong global competition and sharp increases in raw materials and energy prices. Continued margin pressure continues to be a major concern for businesses, which adds to difficulties of investing in plant and training which are vital if the competitive threat is to be addressed effectively.

Exports may well recover over the coming quarters. Conditions for businesses will continue to be demanding and especially so in the short term for the commercial vehicle sector as buyers adjust to new European standards. Despite the many challenges, the North West economy will overall continue to do well.”

Other findings from the 3 rd Quarter QES include the following:

•  Overseas sales and orders have dropped industry wide. Poor export performance is in part a consequence of exchange rate changes.

•  Labour market remains quite strong, most notably among service firms

•  While confidence has increased slightly among service providers, manufacturers confidence has dropped noticeably

•  Investment levels in plant/machinery have risen industry wide, especially among manufacturers. Investment in training has dropped

•  Inflation and interest rate concerns have escalated noticeably. In contrast, concern over competition has eased, though it remains the number one business concern.

Dr John Risk, economic adviser to Chambers of Commerce North West, said: “Domestically, North West businesses are continuing to perform strongly with the positive results of previous quarters continuing this quarter. It is in the overseas markets that our member businesses are finding conditions difficult. Manufacturers are now less confident of the year ahead, whereas optimism among service providers has continued its steady rise.

Skilled people are still in demand and actual employment levels are up, as are investment levels in plant and machinery. Competition remains the number one concern, though worries have eased.

Overall, the North West continues its steady improvement in economic performance, adapting in order to remain competitive. There is strong competition at home and abroad, plus profit are being squeezed.”

For more details on the Quarterly Economic Survey please contact Chamber Policy Executive Alan Welsh on 01925 715150 or email alan.welsh@warrington-chamber.co.uk