Introduction

---

The following report uses data taken from the Quarterly Economic Survey carried out by the Chamber in the first quarter (Q1) of 2023. This regular survey asks businesses a series of questions on key economic indicators. The survey ran from 13/02/23 and 09/03/23.

Summary

---

In total, there were 334 responses. Of these, 37.0% can be broadly classified as Manufacturers. 63.0% can be broadly classified as Service Sector businesses. 37.0% of businesses employed fewer than 10 people. 33.0% employed 10-49 people. 22.0% employed 50-249 people. 7.0% employed over 250 people. 51.0% of businesses were active in international markets over the course of past quarter.

Wider Economic Context

---

The unemployment rate for East Midlands reported by the Office for National Statistics (ONS) decreased by 0.1% compared to the previous three-month (July’22 to September’22) period to 3.5% in the September’22 to November’22 period. Youth (16-17 years) unemployment increased from 18.5% to 28% compared to previous quarter. Nationally, the number of job vacancies for the period November’22 to January’23 was 1,134,000 which is seventh consecutive period showcasing fall in the number of vacancies.

According to Bank of England’s latest Monetary Policy report, inflation has begun to fall and is expected to fall quickly in year 2023. Looking at the exchange rates, the GBP stands at €1.14 in February’23 – €0.01 lower than in November’22. The latest data from Department for International Trade (Q3 2022) show exports valuing £6.44 billion from the East Midlands region.

Region at a Glance

---

*Net Value = Increase - Decrease

State of Economy Index

---

Compared to previous quarter, this quarter saw steep growth. The state of economy index value for the current quarter is 114.

Your personalised results

---

Chamber Commentary

---

The Quarterly Economic Survey for the first quarter of 2023 closed on 9 March, receiving 347 responses.

Following an uncertain end to the year, the results from Q1 demonstrates how businesses are beginning 2023 by displaying signs of growth and an increasing confidence for the year ahead.

There was a small growth in quarter-on-quarter domestic sales. In advanced orders, there was a jump from 23% of businesses witnessing an increase at the end of 2022 to 31% in this quarter, a pattern that was mirrored for overseas markets.

With regards to labour, 26% increased their workforce in the quarter, with 35% anticipating an increase over the coming three months. Some 59% attempted to recruit over the past quarter – up from 55% at the end of 2022 but still below the level of 12 months ago.

Encouragingly, of those trying to recruit there was a drop in people reporting difficulties in finding the right staff – down to 73% from the eight in 10 businesses reporting struggles in the last survey.

In other indicators, cashflow performance also improved from the previous quarter, although there are still significantly more businesses reporting a decline in cashflow (35%) as opposed to an increase (22%).

The sentiment-type indicators were all positive quarter-on-quarter, although some remain marginal. While 18% were planning to increase their investment in machinery and equipment, 17% anticipated a decrease; 23% were intending to up their investment in training, compared to 8% decreasing this.

Price pressures continue their gradual drop-off, with 54% anticipating an increase in their prices, down from 58% the previous quarter and 60% the quarter before that. Of those factors driving this pressure, labour costs were the outright largest factor, followed by utilities, with raw materials dropping back and fuel further behind.

For overall confidence, there was a sharp growth in expectations for turnover – 56% expect this to increase, up from 48% last quarter – and profitability, with 38% expecting an increase, up from 34%.

For both areas, there was a corresponding drop in those expecting to see a decline.