Greater Manchester survey finds business confidence remains stable despite economic uncertainty

A survey of businesses across Greater Manchester has found that despite feeling the effects of increased uncertainty in the economy, business confidence and hiring intentions remain stable.

The results of the Greater Manchester Chamber of Commerce (GMCC) Quarterly Economic Survey (QES) showed that the Greater Manchester Index measure of city-region’s economic performance recorded the second quarter of decline.

The survey of 350 businesses across all industries and boroughs found the manufacturing sector be hardest hit by a slowing of the economy, recording a 23 percentage point decline in sales. In the service economy, B2C services were most impacted, likely attributed to ongoing squeezes on household finances due to high inflation.

Despite the apparent slowing of the economy, however, two-thirds of survey respondents reported they were continuing to actively recruit. Business confidence has also not taken a hit, with levels in Greater Manchester remaining similar to the previous two surveys.

Subrahmaniam Krishnan-Harihara, Head of Research at GMCC, commented on the QES results, saying:

“Inflation, continued supply chain disruptions and uncertainty around demand are having a clear impact on economic growth and business sentiment. We have been worried that inflation and soaring cost of living would affect consumer spending. That has now come to pass. The sharp decline in demand in B2C services is clear evidence that consumers are reining in expenditure. Data coming from the manufacturing sector is particularly concerning. Our members from the sector report that supply chain disruptions are a barrier to quickly accessing raw materials meaning they have to place orders well in advance. That affects their cash positions because more of their working capital is stuck in inventory. With uncertain demand, sales in the quarter have seen a reduction.

“It is a positive that many businesses are continuing to recruit. The only concern we have on this is that the competition for talent could fuel further wage inflation. Many businesses have increased prices to meet higher input costs and that could be driving optimism that they can maintain revenues.

“Business investment is lagging, and this is a serious ongoing concern. Since cash positions have further weakened in this quarter, investment in capital projects is likely to remain constrained. Ultimately it comes down to one thing: neither the city region nor the UK can rely on consumer spending for further economic growth. Consumers will continue to cut expenditure as energy prices increase further. Business investment needs to be unlocked and we urge the government to introduce measures to enable businesses to invest and expand capacity.”