Business activity rising but skills fears remain
BUSINESS activity in Wales continued to rise in August, boosted by the sharpest increase in new orders since April 2015.
The latest Wales Purchasing Managers’ Index (PMI) from Lloyds Bank Commercial Banking was 54.1, although that is down from 55.7 in July.
A reading of above 50 signals expansion in business activity and below 50 signals decline.
Although the rate of growth slowed slightly compared with the previous month, the overall rise in business activity was still robust due to an increase in new orders, which rose at the sharpest rate in 28 months.
Despite this, business confidence across the country dipped to a ninemonth low.
The fall in optimism impacted employment, with the rate of jobs growth weakening.
Input costs – such as the price of raw materials and wages – continued to put pressure on firms, rising for the twenty-second month in a row. Local firms passed on some of these cost increases to customers in the form of higher selling prices.
Allan Griffiths, regional director for SME Banking in Wales, Lloyds Bank Commercial Banking, said: “It’s positive to see that the Welsh economy is continuing to grow, with both manufacturers and service sector firms seeing a significant boost in new business in August.
“However, continued political and economic uncertainty seems to be impacting firms, with both confidence and employment growth dipping.
“It’s vital that companies speak to a trusted business adviser to help them navigate and identify new growth opportunities.”
Moreover, employers in Wales remain cautious about hiring, according to Manpower Group.
The latest quarterly survey from the workforce expert, show a net balance of positive hiring intentions amongst employers in Wales of 2%
Simon Edwards, operations director at Manpower said: “While Wales is the least confident nation or region in the UK, hiring intentions are up 1% compared to the previous quarter.
“However, there seems to be a mismatch in the expectations of candidates and employers, which is impacting the outlook.
“Candidates in Wales are less likely to apply for jobs that pay the National Living Wage, even for temporary work, while employers are looking for qualified candidates, even for low skilled roles.
“This growing gulf between what employers and candidates expect has made it increasingly difficult to fill roles and dampened hiring optimism in Wales - more so than other parts of the UK”
UK-wide the survey shows that employers have also reported a 1% rise in optimism, with positive balance outlook of plus 6%.