Latest economic survey shows business outlook stabilizing in Greater Manchester

The increase in consumer spending after the lifting of all restrictions related to Covid-19 in July contributed to an increase in economic activity in the third quarter according to the findings of this quarter’s Economic Survey (QES) conducted by the Greater Manchester Chamber of Commerce.

The QES-based composite indicator for the urban area, the Greater Manchester Index ™, improved slightly as services trade and manufacturing grew in the quarter.

The survey of 483 companies reveals that sales to domestic and foreign customers increased during this quarter.

The Greater Manchester Index ™ now stands at 31.9, an increase of 1.5 points from the previous quarter’s results. Domestic customers’ ongoing sales and advance orders increased compared to the second quarter of 2021.

Although construction output declined in the third quarter, growth in manufacturing and services contributed to the increase in the GM index. Since companies in the services group represent well over 80% of the city’s economy, sustained economic recovery depends on growth in this sector.

International trade balances improved this quarter. More and more companies engaged in international trade are slowly getting used to the new regulations and requirements of the EU-UK trade and cooperation agreement, but trade with EU partners has been affected.

Subrahmaniam Krishnan-Harihara, Head of Research at the Greater Manchester Chamber of Commerce, said: “The strong third quarter economic performance is a vote of confidence in the adaptability and resilience of Greater Manchester businesses. Customer demand is supported by the easing of restrictions and this quarter’s results show robust growth as consumer spending increased. The service sector, which includes the worst affected sectors of retail, hospitality and leisure, has experienced strong growth. “

“However, some economic pressures are intensifying. Cash positions did not recover to the extent that customer demand did. Capacity use remains modest, with less than 50% of companies reporting that they are operating near full capacity. Without sustained improvement in customer demand, companies will not be able to generate enough revenue to invest in expanding production capacity. We have seen a lot of media coverage around the shortage of materials and the resulting price increases. The latest results show that inflation is a concern for businesses, and many expect to have to increase their selling price to cover rising operating costs.

“The acute labor shortage is of particular concern. As companies try to recruit staff, recruiting challenges have increased. Yet 68,000 workers remain on leave. This indicates that there are skill mismatches because the requirements change. Much investment in training to retrain and upgrade the skills of existing workers will be needed to ensure that labor shortages do not become a bottleneck for economic growth.

This quarter’s survey was supported by Q Energy with a series of specific questions around net zero. There is currently increasing emphasis on carbon neutrality and green growth due to the COP26 climate summit to be held in November. The results were somewhat surprising: only 45% of those surveyed were aware of the UK’s net zero ambitions. In making the transition to net zero, companies face obstacles such as the lack of specific information on carbon measurement and reporting and the high initial cost of low carbon solutions and services. However, 60% of companies indicate that they find it important to achieve environmental and sustainable development goals.

Vijay Natarajan, co-founder and COO of Q Energy, said: “We are delighted to support this quarter’s survey, however, with results showing that 49% of companies cite lack of information on Net zero, carbon measurement and reporting, there is still a long way to go before companies can start taking clear action to reduce their carbon footprint.

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