Chamber survey shows disappointing results

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce

Greater Manchester Chamber of Commerce’s latest Quarterly Economic Survey (QES) has reported disappointing results for the third quarter of this year.

The QES suggests that the local economy is stalling and the recent increases in the number of people in employment have come to a halt.

Greater Manchester’s service sector has seen a fall in domestic demand, erasing the gains made in the second quarter of this year. The sector has had a particularly difficult quarter, with uncertainty reappearing in the Eurozone and the Olympics and poor weather damaging activity on the high street over the summer.

The manufacturing sector, having defied gravity for much of the past two years, has also seen domestic demand fall. This is the fourth consecutive fall in demand, suggesting that the sector has started to contract. However the construction sector in Greater Manchester has seen a big improvement, reporting its strongest results since quarter four of 2011.

The QES was completed by 821 businesses, employing 142,853 people.

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said: “This quarter’s results are disappointing, but not a surprise. We have been warning for some time that the region remains exposed to public sector spending cuts, the weakness of consumer demand caused by the inflationary squeeze on households and has been dependent on export demand to grind out growth.

“In the current slow growth environment it is somewhat inevitable that from time to time there will be setbacks. Although there were encouraging signs in the Q2 results, providing some cause for optimism, there were also signs of weakness. These signs have turned to reality. The summer has been mixed, with many businesses reporting that things have been ticking along. The reality is that economic activity has been somewhat slow.”

“We expect that nationally there will be a return to growth in Q3, when the GDP figures are released on Thursday, though the pace of growth has been muted and some expectations of 0.8% seem a little high for the whole quarter, as things didn’t really pick up until September.”

The QES found that access to finance continues to be a challenge for businesses and that there is a lack of competition among UK banks. The survey also suggests that the trend in retail sales moving from in store to online will continue, leading to major changes to local high streets.

Dr Sloan said: “The long term trend in retail sales shifting from in store to online will continue, so pressure on high street retailers remains. This is unlikely to abate and local authorities will need to put in place more realistic plans to scale back the size of retail offering in many centres in the years to come; allocating more space for commercial, leisure and residential use.

“The economy is evolving and we must recognise that there is a process of creative destruction underway. The retail sector is evolving and, as a consequence, opportunities are arising for new online, wholesale and distribution businesses.”

Greater Manchester Chamber of Commerce’s QES results form the largest part of the national British Chambers of Commerce’s QES report, which is used by key decision-makers in the Bank of England and the Treasury.