QES

Quarterly Economic Survey
Executive Summary - Q1 2021

Domestic sales

Manufacturers continue to report increasing domestic sales although the pace of growth appears to have slowed a little and forward orders net balance fell back into negative territory. We report a large variance across service sector firms and whilst overall net balance was +3% within ICT and professional services net balance was +39% and +17 respectively; whereas leisure, hospitality and non-essential retail report a net balance of -24%.

Export sales

The service sector reported declining international sales in the last quarter, likely down to disruption and new trading arrangements with the EU. Manufacturers also recorded slowing export sales and likely down to similar reasons as companies get used to new paperwork and declarations.
Just under a quarter of manufacturers said they hadn’t faced any difficulties moving goods, whilst around a third of service sector firms also said they had experienced no disruption. However, 60% of manufacturing firms said they had experienced difficulties exporting and 1 in 2 faced challenges bringing goods into the UK. Roughly 4 in 10 service sector businesses said they had experienced difficulties either importing or exporting.

Employment 

Despite slowing sales activities, employment numbers are starting to return back to pre-crisis levels. One third of service sector firms and nearly 1 in 2 manufacturers attempted to recruit in the last quarter with the majority of vacancies full time and permanent. 41% of service sector and 32% of manufacturers reported difficulties finding appropriately skilled candidates.

Investment 

Investment intentions also improved in the last quarter as companies begin to see beyond the current crisis. Capital and training investment net balance figures improved within manufacturing and service sector firms.

Business confidence

This quarter saw a big improvement in business confidence with firms expecting increases in turnover and profits over the next 12 months at levels last reported in 2017 for service sector and 2015 for manufacturers. However, cashflow remains challenging for many and manufacturers reported that a significant majority would look to increase prices to compensate for the huge increase in costs they are facing from haulage and shipping, Brexit administration and other input costs.

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