Latest business survey shows slow down in growth started before current Covid restrictions
Despite sustained consumer spending in the lead up to the festive season, economic growth is softening in Greater Manchester, according to the findings of this quarter’s Economic Survey (QES) conducted by Greater Manchester Chamber of Commerce (GMCC).
The survey of 337 businesses revealed that international trade activity has picked up and compensated for a decline in sales to domestic customers in this quarter. There are other economic headwinds currently impacting businesses across the city region, including recruitment difficulties and a shortage of labour. To develop a better understanding of skills related constraints, GMCC has partnered with Greater Manchester Learning Provider Network (GMLPN) to develop the GM Business, Employment, Skills and Training Monitor (GM BEST). The results of the first phase of GM BEST show in greater detail the recruitment challenges facing businesses across all sectors in Greater Manchester.
The Greater Manchester Index, a composite of several key results from the QES, now stands at 32.5, an increase of 0.6 points from the previous quarter’s results. Current sales to and advance orders from domestic customers decreased relative to Q3 2021. Although UK sales in manufacturing and services declined, the expansion in international trade activity contributed to keeping the GM Index at roughly the same level as in the previous two quarters.
The balances relating to international trade improved this quarter. More businesses engaged in international trade are slowly getting used to the new regulations and requirements under the EU-UK Trade and Cooperation Agreement but, overall, trade with EU partners has been impacted.
Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said: “After strong economic performance in Q2 and Q3, growth had started softening even before the new set of Omicron restrictions were imposed. Our view has been that consumer spending in B2C services contributed significantly to economic growth in 2021. Business investment is lagging behind, and this is a serious ongoing concern.
“We know that the restrictions imposed recently have hit hospitality businesses hard. The worst affected sectors of retail, hospitality and leisure recorded strong growth in October and November but that has been derailed now. It is also possible that consumer spending will decrease after the festive season. The combination of these impacts could lead to a further reduction in economic activity in the new year.”
Despite the softening in growth, employment prospects remain strong. The QES results show that over half the respondents attempted to recruit but three quarters of those who attempted to recruit faced severe recruitment difficulties.
Mark Currie, Chair of GMLPN, highlighted the importance of this collaborative research: “GMLPN priorities include supporting training providers – its members – to meet employer needs. This partnership with GMCC means that together we can reach 1000s of businesses to gather real time information on employer demand for skills. More responsive and agile training provision on a local basis as a result of this intelligence will be one important impact. GMLPN’s investment in GM Best brings us to the next stage of a long-standing partnership with GMCC and is strategically aligned with the rollout of LSIPs nationally and LSIP development in GM.”
Commenting on the GM BEST results, Subrahmaniam said: “The acute shortage in labour is a worry for businesses as it increases competition for talent and fuels wage inflation. The combined impact of Covid-19 and Brexit has caused both short-term labour shortages and long-term structural changes in the labour market. There are other long-standing skills and training challenges that businesses in Greater Manchester face. For example, the number one reason for recruitment difficulties is the lack of job specific technical skills. Businesses also report that the lack of soft skills is a barrier to recruiting the right people. However, the skills deficits in different sectors and in different parts of Greater Manchester are different. The GM BEST results shines a light on skills mismatches and the scale of the reskilling and upskilling challenge. This collaborative research lays the foundation for localised, place-based skills planning in the city region.”