When business is slow response rates usually fall – as they have across the South East since last year. Nevertheless in Q2 we contributed 49% of South East responses. 1 in 4 added free-style comments, half of them anti-Brexit.
Q2 saw a substantial minority of respondents (38%) increase their UK Sales. At the same time, the proportion reporting a decrease continued to bump along @ 1 in 4. UK forward Orders followed a similar pattern.
In contrast, Export Sales and Export Orders continued their substantial decline since the end of last year: one-third reported a decrease whilst only one-sixth reported any increase – and the proportion of respondents that export at all fell from 43% in Q1 to 38% in Q2. Some exporters evidently find themselves becalmed in not-yet-implemented Brexit, a kind of “phoney war” as their EU markets transfer demand to non-UK suppliers.
- Cashflow remains at its tightest for six years.
- Pricing continues its upward trend, but more modestly than Q1.
- Expectations of Sales T/o for the next 12 months remain weak. Gloom about Profits lifted a bit, however; Price rises holding? Productivity gains?
NB Historically these 12-month expectations exceed the Sales and Profits eventually achieved. They show a trend in confidence levels not outcomes.
Employment: Steady, with Employment expectations slightly weaker. Most seem dug in, whilst ready also for eventual growth, should it occur. Fully two-thirds reported working Below Capacity, see below. More serious, those in Q2 expecting to grow their workforce (23%) – and those expecting to shrink (13%) – are the weakest figures since 2013.
The brightest light on the horizon in Q2 is that the reported Q1 cuts to planned productivity investment (in Training and Kit) eased and reverted towards their respective norms. Better still, the percent upping their planned investment in Kit rose to its highest since 2015 (28%).
As usual half tried to hire staff, of whom 8 in 10 still report hard-to-find skill sets: Professional/managerial (54%) and Skilled manual/ technical (41%). F-t, P-t, Perm, Temp jobs are all in slight decline.
Among pressures on pricing, overheads were mentioned by almost half. With demand slow, fully two-thirds reported working below capacity.
See the full report here