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East Midlands Chamber News

DNCC Survey: Economy Bounces Back In Q1

  • Recovery picks up in Q1 2011 after stuttering end to 2010
  • Manufacturers' UK and Export Sales hit four-year high
  • Employment up in service sector
  • Confidence levels steady, as firms still look to future with caution

Derbyshire and Nottinghamshire Chamber of Commerce's latest Quarterly Economic Survey of businesses points to fresh growth in the regional economy during the first three months of this year, after the recovery slowed at the back end of 2010.

Despite increases in inflation and VAT, the economy across Derbyshire and Nottinghamshire saw a return to growth in the first quarter of 2011.

UK sales were higher in both counties, and in both the manufacturing and service sectors, whilst manufacturers in Derbyshire led the way in terms of export sales growth.

Overall employment levels also bounced back from their fall in the previous quarter, with the end of temporary contracts and the return of workers to the job market reducing the number of firms reporting recruitment difficulties.

And looking ahead, firms are more confident about UK orders in Q2. Export orders are at their highest level since March 2008, with manufacturers reporting their strongest order books for five years, although export orders in the service sector fell back slightly.

Firms are also more positive about future jobs growth, with 21% expecting to increase their workforce in the next three months, compared with 7% planning to shed labour.

George Cowcher, Chief Executive of Derbyshire and Nottinghamshire Chamber of Commerce, said: "The findings of this survey paint a much brighter picture than the previous one, which showed that the pace of growth slowed in the last three months of 2010.

"Businesses performed much more positively in the first quarter of 2011. Even with cuts in public spending, rapidly rising fuel prices and a hike in VAT to contend with, many businesses have reported increasing sales and orders, improved cash flow and rising employment, although it is interesting to note that the majority of firms are still not operating at full capacity.

"However, whilst the outlook is improving for many firms, concerns about raw material costs are at their highest since December 2008, with fuel price increases and higher transport costs squeezing firms' margins and leading to further price pressures.

"Manufacturers continue to drive forward the regional economy with UK and export sales balances at four-year highs. With future orders and investment plans being less positive, sustaining this growth is essential if we are to rebalance the economy.

"Service sector UK sales have increased and firms are significantly more confident about UK orders. Employment in the sector has grown and is projected to grow and firms are benefiting from skilled former public sector workers entering the job market alongside those ceasing temporary jobs prior to Christmas.

"There are still plenty of opportunities for growth out there, particularly in the export markets where firms have yet to reach their full sales potential and if we are to sustain and fully secure the recovery, then it is absolutely crucial that our businesses ensure that their products and services are consumed in new markets around the world."

You can view the full QES report for Q1 2011 by clicking here or read a shortened version of the key findings here.