ONE of the first major economic indicators of the year has revealed cooling growth across both the manufacturing and services sectors during the first three months of 2015.
Firms in the British Chambers of Commerce (BCC) quarterly economic survey – the largest sample of its kind in the UK – reported “somewhat weaker” activity in most areas, including exports, domestic markets and investment. Released today, the results come on the heels of a strong end to 2014, when the net balance of firms expanding their workforce rose to the highest level since records began in 1989.
By contrast, employment expectations in the first quarter of this year fell slightly as some measures of performance dipped to pre-recession levels.
John Longworth, director-general of the BCC, said it was “not a huge surprise” to see slightly weaker numbers after a strong final quarter last year. Though businesses expect to grow at a somewhat slower rate in the coming months, most remain optimistic.
“The UK still faces obstacles on the path to sustainable, long-term growth,” Longworth said. “Unless support for exports and business investment is placed at the heart of any future government, consumption and government spending will continue to drive an economic recovery that is unbalanced and unsustainable.”
The figures come as separate research from Grant Thornton’s International Business Report (IBR) reveals a similar if somewhat rosier picture in Scotland.
Just 2.2 per cent of private firms north of the Border said they are pessimistic about the future, down from 10 per cent a year ago. Nearly 74 per cent expect turnover to grow during the coming 12 months, a year-on-year increase of ten percentage points.
And unlike elsewhere in the UK, Scottish businesses reported a slightly improving export performance with 21.7 per cent predicting an increase, up from 20.4 per cent a year ago.
Kevin Engel, managing partner for Grant Thornton in Scotland, said the improving outlook is expected to lead to a recruitment drive.
“Many companies are making big decisions about their future and this kind of data helps to inform investment strategies,” Engel said. “We should expect the private sector to continue this upward trajectory and that should have a knock-on effect in the labour market.”
Looking at the UK-wide figures from the BCC, the group’s chief economist, David Kern, said the fall in most balances was “disappointing”. However, solid economic growth is expected to continue.
The balance of manufacturing firms reporting higher exports fell by seven percentage points from the fourth quarter to +19 per cent, while domestic sales dropped by 6 to +30 per cent. Service exports dipped slightly to +21 per cent, while domestic sales were four percentage points lower at +34 per cent.
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