Bosses fear double whammy of skills shortage and inflation
about the strength of the economy are rising among East Midlands businesses – despite the boost that came as big businesses opened following lockdown.
Worker shortages, notably in the HGV sector and warehousing, plus price pressures along with the new health and social care tax that increases the burden for employers and employees, threaten to dampen the recovery according to the latest East Midlands Chamber business survey.
Its latest quarterly survey of companies suggests managers have seen improvements in most areas including sales, cashflow, employment and investment intentions.
But firms also reported issues with price pressures and access to the right skills to fill job vacancies.
More than 400 businesses across Derbyshire, Leicestershire and Nottinghamshire took part in the survey, which showed:
Around a third of businesses had seen a rise in UK sales and advanced orders
Overseas business activity lagged behind domestic activity, but remained positive, although anticipated sales going forward had dropped
A quarter of businesses grew staff numbers in the quarter and more than a third expect to grow over the next three months
After five quarters of negative cashflow for most firms, things were now on the up, with around a quarter hoping to invest in training, machinery and equipment
More than half of business managers were confident turnover will improve over the coming quarter, while a third believe profitability will increase
However, almost half said they were concerned about future price
increases
Around two in every three managers that had been looking for new staff said they had faced problems finding the right people
East Midlands Chamber director of policy and external affairs Chris
Hobson said: “The top-level results show a mixed picture that hides a number of variables at play in the East Midlands economy.
“Cashflow continues to improve for more businesses than not, training investment intentions are posiCONCERNS tive and overall confidence in future turnover continues its upward trajectory.
“As the economy continues its reopening after a successful vaccine rollout, the pent-up demand that characterised much of the summer remains a positive factor.
“But there are also a few areas of concern. Price pressures continue to come from increased raw material costs, pay settlements and, increasingly, energy costs.
“This has knock-on effects, with investment in machinery and equipment growth – an important ingredient in fuelling a recovery – falling back slightly on the previous quarter.
“Performance in overseas markets remains volatile and, while turnover confidence has grown from Q2, confidence in increased profitability has fallen back, a result of squeezed margins.
“Recruitment is also a growing problem, with over seven in 10 struggling to fill vacancies across all skills levels. There’s still much that we don’t yet fully understand.