Greater Manchester economy defies expectations in findings of quarterly business survey

Despite gloomy predictions at the start of the year, the Greater Manchester economy is outperforming expectations according to the findings of the latest Quarterly Economic Survey (QES) conducted by Greater Manchester Chamber of Commerce (GMCC).

The headline indicator of the survey, the Greater Manchester Index, rose to 30.3, up from 17.8 in the last quarter of 2022, showing an improvement in the overall health of the city-region’s business.

GMCC’s QES surveyed nearly 300 businesses across all 10 boroughs of Greater Manchester between February 13th and March 7th, inviting business leaders to share details of their business’ performance in the previous three months trading, and their outlook for the economy and their performance for year ahead.

Survey data found that while domestic sales had declined in the services and construction sectors, there was a sharp uplift in sales for the manufacturers, which had previously reported a steady decline in demand in the previous quarters. The increased sales figures for the manufacturing sector also coupled with improved cashflow positions and capacity utilisation reported.

The city-region’s exporters also reported an improvement in their position in the first quarter of 2023, with sales improving across all three sectors (services, manufacturing and construction).

Despite the mixed picture for sales, all sectors of the Greater Manchester economy expressed increased confidence in maintaining levels of turnover and demand in the months ahead. This boost to business confidence was further demonstrated by an increase in spending on capital investments during the first quarter of 2023.

Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said:

“The increase in the Greater Manchester Index™ is good news for business prospects. The improvement in international trade, business confidence and investment have all contributed to the increase in the index. The low level of business investment has been a concern for quite some time and, as the cost of living crisis forces households to rein in spending, business investment needs to pick up to sustain economic growth.

“One reason business investment may have gone up in Q1 could be that businesses phased investment in this quarter to make use of the super deductions scheme. It is, therefore, important to assess how business investment fares in the coming months. The Chamber of Commerce network’s economic forecast indicates that business investment will continue to lag, and we called for measures to mitigate this. In his Spring Budget, the Chancellor announced full expensing, which allows businesses to deduct 100% of the cost of eligible plant and machinery from their profits before tax. While it is a positive signal, businesses also need certainty and clarity about the economic outlook before they commit to expanding capacity.  

“At the same time, businesses will also be concerned that inflation remains above 10%. Food inflation in the UK is particularly high and if that puts pressure on household budgets, employees are likely to demand wage increases, which could in turn put pressure on business cashflow and margins. Overall, the QES results show that there is cautious optimism amongst Greater Manchester’s businesses and are a clear indication that the regional economy is showing some resilience despite the headwinds.”