Yorkshire firms less optimistic than rest of UK

Bosses gloomy on outlook as costs rise

BUSINESS OPTIMISM in Yorkshire fell more sharply in the first three months of the year than across the UK as a whole, new figures from Britain’s biggest business organisation show.

Whilst total new orders in Yorkshire rose at a similar pace in the three months to April compared with January, up to 24 per cent from 21 per cent, firms in the region expect new orders to fall over the next three months.

In Yorkshire and the Humber, average unit costs in the quarter to April grew at a historically strong pace, as did average domestic prices.

The data, published in the CBI Quarterly Industrial Trends survey, also showed that investment intentions for the year ahead in the region weakened across the board in April compared to January.

Output volumes grew over the quarter to April in Yorkshire but are expected to be broadly flat over the next quarter.

Helen Morgan, Leeds City Region Lead for Accenture, who sponsored the report, said: “Yorkshire & the Humber has a rich manufacturing history and is at the cutting edge of innovation in the sector, but there is no question that there are challenging times ahead. Rising costs are taking a heavy toll and as we can see in the data, firms in the region expect order numbers to fall over the next quarter.

“To remain competitive and ensure that optimism rises once more, retaining, motivating and upskilling staff will be critical,

as will be lowering process costs and making the supply chain as efficient as possible.”

Looking at the UK as a whole, Anna Leach, CBI Deputy Chief Economist, said: “Manufacturing orders and output continue to grow, albeit at slower rates. But the war in Ukraine is exacerbating the Covid-related supply crunch, with cost increases and concerns over the availability of raw materials at their highest since the mid-1970s.

“It’s little wonder that sentiment has deteriorated sharply over the past three months and manufacturers are now scaling back their investment plans.

“The government must look again at near-term support measures to help firms through this crisis. An immediate priority should be to provide cashflow support for those struggling with wholesale energy costs via the Recovery Loan Scheme, while cutting bills for Energy Intensive Industries can help maintain UK competitiveness.”

Nationwide, the survey, based on the responses of 250 manufacturing firms, found business optimism fell at the sharpest pace since April 2020 and that output volumes in the quarter to April grew at a slower pace than in the quarter to March but remained above the long-run average.

Total new orders rose at a slower pace compared with January and firms expect growth to slow further over the next three months.

Average costs in the quarter to April grew at the fastest rate since July 1975, while domestic prices grew at the fastest pace since October 1979.

A supplementary question found that the cost of raw materials was the most important factor behind expectations for cost growth in the next three months.

Eighty per cent of respondents said this was extremely important, followed by energy costs at 59 per cent, transport costs at 41 per cent and labour costs at 38 per cent.