cornwall quarterly economic survey 2nd quarter 2017...2 • questionnaire specified and designed by...

1

Cornwall Quarterly Economic Survey2nd Quarter 2017

2

• Questionnaire specified and designed by British Chambers of Commerce

• 2nd Quarter Economic Survey of 2017

• In Cornwall: Sample drawn from Chamber members and non-membership organisations 39th survey for Cornwall Chamber 82 respondents recruited using Chamber member messaging (M2M newsletter and

bespoke direct mail), and promotion through Cornwall Chamber Networking events. 54 responses received from Chamber members, a response rate of about 11% 25 non-members provided responses

Survey data submitted to the British Chambers of Commerce (BCC) within 24 hoursof the survey closing

11 non-members requested further information about Cornwall Chamber

The Survey

3

Business Confidence and Performance

• 40% of respondents say they are operating at full capacity, a slight increase from last quarter (37%), 51% operating below capacity (constant against last quarter and last year (50%)). The balance on expectation for change in turnover has gone from 59% in Q1 2017 to 67% in Q2 2017 (i.e. those expecting an increase less those expecting a decrease). Expectation of profitability increased, with the balance up to 46% from 37%.

• UK Sales have increased (net balance of 42% compared to 22% in the last quarter), and 38% reported an increase in UK Orders/advanced bookings (net balance of 27% compared to 22% in Q1 2017.)

• 28% of Q2 participants are exporting. About 50% of these (or 13% of all businesses) report increases in overseas sales this last quarter and 57% (or 15% of all businesses) report increases in advanced export orders.

• 84% are confident about their cash flow position, which has stayed the same (49%) or improved (35%), marking an increases since last quarter.

• Investment in training remains largely static with a balance of 16% having investment plans for training compared to 14% in Q1 2017. Investment in plant and equipment increases against Q1 2017, with a net balance of 12% compared to 19% in Q2 2017.

QES Headlines (1)

4

Market Pressures

• 63% are experiencing pressure to raise prices, slightly down from 69% in Q1 2017.o Reasons for increasing prices comes from across the board, with 38%

attributing to increases in material prices (up from 29%), 17% to finance costs, and 33% to pay settlements (up from 17% in Q1 2017).

• 76% reported external pressures, (similar to Q1 at 79%) with an increased concern across all named areas except interest rates, which remained constant at 18% compared to last quarter:

o Exchange rates – 34% (29%)o Inflation – 35% (32%)o Competition – 39% (33%)o Taxation – 42% (28%)o Business rates - 35% (33%)o Interest rates – 18% (18%)

QES Headlines (2)

5

Workforce and Recruitment

• In terms of change to workforce, 35% say they have increased their workforce (higher than Q1 with 26%) and only 11% have decreased (constant with Q1).

• Looking to the next quarter some increase is predicted, with 40% (35% at Q1) expecting to increase workforce and at the same time 4% (constant with Q1) predicting a decrease. 52% do not foresee any changes to their workforce at this point.

• The proportion attempting to recruit has increased to 52% (46% at Q1). Of those, 63% -similar to Q1 (61%) and 2016 Q2 (64%) - have experienced difficulties recruiting the right people. The positions businesses were looking to fill remain principally full-time posts, but also shows an increase in part-time jobs:

QES Headlines (3)

o Skilled Manual/Technical – 58% (51%)o Professional/Managerial – 58% (48%)o Clerical – 37% (35%)o Semi/Unskilled – 33% (38%)

o Full time – 84% (84%)o Part time – 51% (37%)o Permanent – 58% (63%)o Temporary – 23% (27%)

6

3%

10%

23%

65%

9%

9%

15%

67%

2%

13%

21%

63%

200 and over

50 - 199

20 - 49

0 - 19

Number of Employees

This quarter (Q2 2017)

Last year (Q2 2016)

Last quarter (Q1 2017)

Q. How many people do you employ at your site?

Sample Profile

7

0%

3%

2%

0%

6%

10%

6%

10%

8%

10%

10%

36%

4%

5%

1%

3%

2%

6%

6%

10%

12%

7%

11%

33%

4%

6%

5%

0%

0%

7%

6%

10%

5%

4%

2%

51%

Other sector

Construction

Manufacture of E or IT Goods

Transport/Distribution

Raw Material Production, etc

Consumer Services

Public/Voluntary Sector Services

Manufacture of other goods

Marketing/Media

Retail/Wholesale

Hotels/Catering/Leisure

Professional Services

This quarter (Q2 2017)Last year (Q2 2016)Last quarter (Q1 2017)

Q. What is your main business activity?

Business Activity

8

10%

17%

34%

39%

9%

16%

36%

39%

7%

12%

27%

54%

NotApplicable

Decreased

No Change

Increased

Overall UK Sales

This quarter (Q2 2017) Last year (Q2 2016) Last quarter (Q1 2017)

27%

10%

31%

32%

28%

10%

32%

30%

28%

11%

23%

38%

NotApplicable

Decreased

No Change

Increased

Overall UK Orders

Q. Excluding seasonal variations, over the past 3 months… (i) UK sales/custom/bookings have.. (ii) UK orders/advance custom/bookings have..

Quarterly Change in UK Sales and Orders

9

71%

2%

14%

11%

78%

2%

13%

7%

73%

2%

11%

13%

NotApplicable

Decreased

NoChange

Increased

Overall Export Sales


71%

4%

13%

10%

79%

3%

10%

8%

73%

1%

10%

15%

NotApplicable

Decreased

No Change

Increased

Overall Export Orders

Q. Excluding seasonal variations, over the past 3 months… (i) Export sales/custom/bookings have.. (ii) Export orders/advance custom/bookings have..

Quarterly Change in Export Sales and Orders28% export to overseas markets (17% of these use Cornwall Chamber to process their export documentation.)

10

4%

11%

60%

26%

9%

11%

53%

27%

5%

5%

55%

35%

NotApplicable

Decreased

No Change

Increased

Quarterly Change in Workforce


4%

4%

57%

35%

10%

8%

56%

25%

4%

4%

52%

40%

NotApplicable

Decrease

No Change

Increase

Expected Quarterly Workforce Change

Q. Over the past 3 months… (i) has your workforce.. (ii) do you expect your workforce to..

Workforce Changes and Expectations

11

27%

63%

37%

84%

28%

36%

42%

82%

23%

58%

51%

84%

Temporary Jobs

Permanent Jobs

Part Time Jobs

Full Time Jobs

Attempted to Recruit …


Last year (Q2 2016)


Tried to Recruit, 52%

Not Tried, 35%

Not applicable,

12%

Last quarter(Q1 2017)

46%

Last year(Q2 2016)

46%

Q. Have you tried to recruit staff over the past 3 months?Q. If you have tried to recruit staff… were they for…

Staff Recruitment

12

No, 37%Yes, 63%

Difficulties RecruitingSuitable Staff

Last quarter(Q1 2017)

61%

Last year(Q2 2016)

64%35%

38%

51%

48%

26%

30%

44%

56%

37%

33%

58%

58%

Clerical

Semi / Unskilled

SkilledManual/Technical

Professional /Managerial

Tried to Recruit…


Q. If you have tried to recruit staff… Did you experience any difficulties finding suitable staff?Q. For which of the following categories of employee have you tried to recruit?

Staff Recruitment

13

10%

19%

47%

24%

5%

19%

50%

26%

2%

13%

49%

35%

Not Applicable

Worsened

Remained theSame

Improved

Quarterly Cashflow Changes


7%

4%

53%

37%

17%

4%

59%

20%

5%

2%

59%

34%

NotApplicable

Decrease

RemainConstant

Increase

Expected Quarterly Price Trends

Q. Over the past 3 months has your cashflow…Q. Over the next 3 months do you expect your prices to…

Cashflow Change and Price Expectations

14

20%

8%

50%

22%

17%

4%

59%

20%

12%

4%

60%

24%

Not Applicable

Decrease

Remain theSame

Increase

Planned Investment: Training


27%

11%

39%

23%

21%

9%

48%

21%

20%

10%

41%

29%

NotApplicable

Decrease

Remain theSame

Increase

Planned Investment: Plant and Equipment

Q. Have your investment plans for Training…Q. Have your investment plans for Plant/Machinery/Equipment…

Investment Intentions

15

13%

51%

37%

12%

50%

38%

9%

51%

40%

Not Applicable

Below Capacity

Full Capacity


Q. Are you currently operating at...

Operating Capacity

16

4%

9%

20%

68%

1%

9%

21%

69%

2%

6%

18%

73%

Not Applicable

Decrease

Remain theSame

Increase

Turnover - Expectations for Next 12 Months


8%

14%

26%

51%

4%

14%

24%

58%

2%

15%

22%

61%

NotApplicable

Decrease

Remain theSame

Increase

Profitability - Expectations for Next 12 Months

Q. Do you believe that over the next 12 months… (i) Turnover will.. (ii) Profitability will..

Business Confidence

17

30%

12%

17%

29%

63%

19%

47%

29%

67%

17%

33%

38%

Other Overheads

Finance Costs

Pay Settlements

Price of RawMaterials


Last year (Q2 2016)


63% of 2017 Q2 respondents are suffering pressures to raise prices (69% at 2017 Q1 and 55% last year at 2016 Q2.)

Q. Is your business currently suffering pressures to raise its prices from any of the following? (Please tick all that apply.)

Pressure to Raise Prices

18

76% of 2017 Q1 respondents identified one or more of the above as issues of concern,compared to 79% for 2017 Q1 and 70% for last year 2016 Q2.

32%

18%

33%

29%

28%

33%

17%

16%

29%

26%

58%

39%

35%

18%

35%

34%

42%

39%

Inflation

Interest Rates

Business Rates

Exchange Rates

Taxation

Competition


Q. Please indicate which of these following factors are more of a concern to your business than 3 months ago. (Please tick all that apply.)

External Business Concerns

19

9%

6%

11%

17%

14%

16%

19%

21%

26%

15%

7%

1%

2%

4%

6%

7%

9%

49%

15%

16%

6%

12%

19%

18%

22%

26%

30%

75%

No concerns

Other

Access to / attracting unskilled workforce

Access to new EU supplier markets

Continuing relationships with EU customers

Continuing relationships with EU suppliers

Access to new EU export markets

Access to / attracting skilled workforce

Foreign exchange rates

General uncertainty in the market

Other concern(s)The main concernTotal

Q. What is your main business concern about Brexit? Q. What other concerns about Brexit do you have?

Brexit Concerns75% are concerned by a general uncertainty in the market in regards to Brexit.

20

Other Main Brexit Concerns

• Change in regulation and who will oversee it.• ESF funding - continuity of provision post-Brexit. • Exchange rates which directly affects the price of electricity.• Recruiting carers from outside EU on work permits… “who will not be able to apply for tax credits

and immediately ask for restricted hours because otherwise they lose benefits!!”• Export… “clients that export - their trading activity and profitability impact on us in the services they

require from us.”• Impact on economic confidence / workplace…

– “Changes of law/working practices.”– “Our business is really a 'luxury item' rather than a necessary expenditure so anything that

causes people to worry over their finances can effect our income as we would generally be something people would spend on last of all over goods, food, holidays etc.”

• Loss of EU National clients based in the UK looking to relocate back to the continent. • Rising oil prices.

21

Q. Please use this space to make further comments regarding the issues covered in this survey.

Final Comments (1)“Access to European growth funding becoming more difficult.”“Brexit will present a positive range of opportunities for business. Those who embrace the change will be in a good place to benefit from this.”“Our business experienced a significant downturn after the referendum and Trump's election. I am very concerned that businesses will put decisions on hold while they see how Brexit pans out, which will have a major impact on our business. We're currently not planning to hire again until well after Brexit comes into force.”“Can't see any advantage to being outside the EU.”“ESF and ERDF have brought significant money into Cornwall, future is very uncertain at the moment as to whether this will continue.”“[Brexit] Generally a terrible and unnecessary risk!”“I wish to be able to work within the EU and do not want a hard Brexit (whatever that means!). We need to trade with our nearest customers. We import and export and any longer lead times due to hold ups in the customs will have a knock on effect on our supply chain. Also shortage of staff who want to come to work - we find it hard to get people to actually turn up to interview unless we chase them. Local job centres worked much better in past.”

22


Final Comments (2)“It should be stopped.”“Lack of knowledge around the shape the exit deal will take make it difficult to plan.”“My only concern is in regard to having access to a wider labour market which will not result in immediate applications for working and child tax credits. I would also like to see an exemption from the 'gangmaster' regulations which prevent me from covering my costs if I offer single shared accommodation to prospective care sector employees. I would be in breach of the equality act if I offer subsidised accommodation to one group, and not to all. Accommodation offset allowance would make these staff far better off than local staff.”“Not sure that the general public know what they voted for and how complicated negotiating a good deal will be. I believe we are in for a bumpy ride.”“We've already been badly burned as a result of the 2016/2017 geopolitical situation (which caused our clients to delay projects), and I fear the impact of Brexit on our business.”“The sooner we get on with [Brexit] the better.”“Too much attention being paid to talking about Brexit and not enough attention being given to the real negotiations and important non-Brexit issues such as health and education.”“We believe that Brexit will have a major negative impact on the business environment in which we operate i.e. sustainability and development.”

23


Final Comments (3)“Farming subsidies not being replaced. Current business and infrastructure funding levels in the region not being replaced.”“We need access to skilled professionals. The boom in exports is short term and the increase in cost to purchase raw materials will further fuel inflation and drive up borrowing costs and wage demands.”“We need more central guidance e.g. re AEO.”“Our expansion plans are into EU to keep profit margins up. We need more staff availability - many UK workers do not turn up for interview. Difficulty in finding staff locally - if EU workers not allowed we will not expand.”

24

The Cornwall QES is managed on behalf of the Cornwall Chamber by PFA Research Ltd

Cornwall Quarterly Economic Survey2nd Quarter 2017

PFA Research LtdTremough Innovation CentrePenrynTR10 9TA

W: www.pfa-research.comE: [email protected]: 01326 375705

http://www.pfa-research.com

mailto:[email protected]

cornwall quarterly economic survey 2nd quarter 2017...2 • questionnaire specified and designed by...

Documents