Greater Manchester economy facing increasingly difficult conditions

Both manufacturers and service providers are facing increasingly challenging conditions, according to the latest Quarterly Economic Survey from Greater Manchester Chamber.

The survey shows manufacturers are doing better than service providers. UK sales in manufacturing have recovered slightly and now stand at 4%, up 3 percentage points from 1% last quarter. UK orders for manufacturers have gone from –11% to 0% this quarter. UK sales and orders for services have however decreased by 4% and 8% respectively.

Holly Keogh, the Chamber’s Assistant Policy Manager, said: “The results this quarter show a bleak outlook. However, manufacturers are recovering slightly and there is still growth albeit at a slower rate.”

Compared with last quarter, exporters continue to do better than the average. Sales and orders are still growing. For exporting manufacturers, sales have increased from 11% last quarter to 14%, however orders have decreased by 7 percentage points. For services the picture is much bleaker. Sales are down 3% on last quarter, although orders do show a rebound from –15% to –8%.

Manufacturers and services also continue to report worsening cash flow positions, but so far this follows a relatively common pattern. It should be noted that these results reflect a disproportionate share of construction related businesses, which are experiencing a markedly worse business environment.

According to the survey, the difficult trading environment has not yet affected the workforce. Manufacturers expect their number of staff to grow over the next quarter, up 9 percentage points from 0% last quarter. This trend, however, is not reflected in the construction sector, where more redundancies and layoffs are expected.

The biggest area for concern remains inflation. Concern amongst manufacturers is up 1 percentage point to 64% and amongst services has risen from 59% to 67%. Manufacturers also cite exchange rates as an area of concern, while services are more worried about competition.