Quarterly Economic Survey reveals strong growth

Greater Manchester Chamber of Commerce

The results of Greater Manchester Chamber of Commerce’s latest Quarterly Economic Survey (QES) show strong growth continued into the second quarter of this year.

The outlook for home orders and deliveries strengthened significantly in the manufacturing sector, with a very slight slowdown experienced in the service sector.

Internationally, manufacturers were less confident about the prospects for export orders and deliveries into the second quarter, but service sector activity looked much stronger for both deliveries and orders.

Confidence about levels of profits increased in the service sector, but manufacturing expectations were hit by the concerns about export margins and profits.

Speaking at his last Quarterly Economic Breakfast as Chamber Chief Economist, Dr John Ashcroft, said growth in the second quarter of this year was 2.7%, compared with 2.4% in the first quarter of the year. He predicted growth for the rest of the year would be 2.7%.

He added: “The economy is looking good for this quarter and the rest of the year. Confidence in manufacturing and the service sector remains high. However, it is the service sector, particularly leisure and transport, which is driving growth. We are seeing growth in construction, but the service sector is growing at a helter-skelter rate.”

Despite government talk of re-balancing the UK economy and the ‘March of the Makers’, he said the service sector would remain the main driver of the UK economy. He pointed out that, while the UK had some excellent manufacturers in the automotive, aeropace and marine sectors, they relied on imported raw materials and components.

“The trade deficit will not improve over time, because as the economy expands it pulls in imports. Governments need to accept the reality of this situation and focus on stimulating service sector growth.”

He said jobs vacancies were now higher than they were pre-recession and recruitment difficulties were forcing up earnings.

“The jobs market is signalling overheating in the economy, especially in a private service sector which is growing at 4%. The claimant count rate fell to 748,000 in May as the number of vacancies remained steady at 734,000. Vacancies may shortly exceed claimant count numbers if current trends persist.”

While he said consumer confidence was high and retailers were seeing a high level of sales, they were at lower values than previously.

“We are in a period of low inflation, low interest rates and are seeing an earnings surge. This will be as good as it gets for consumers,” he added.

Turning to the global economic picture, he said: “We’re seeing strong recovery in the UK and US. There’s good recovery in Europe and China. There is good, strong recovery in the Eurozone, including the so-called PIGS (Portugal, Italy, Greece and Spain). Russia is struggling because of oil and gas prices and there is a slowdown in Japan.”

However, he warned that if Greece left the Euro, it would have a knock-on effect on the wider Eurozone and UK economy.

Following the QES presentation, Dr Ashcroft took questions from the audience and Chamber Chief Executive, Clive Memmott, paid tribute to his work as Chief Economist.

Chris Fletcher, the Chamber’s Policy & Marketing Director, brought the meeting to a close with a Campaign For Business Update. This covered a range of issues, including the General Election, the Devolution Bill and the Northern Powerhouse.