Regional business ended the year strongly, but uncertainty is holding back decision making; these are the main findings from the West & North Yorkshire Chamber of Commerce last quarterly economic survey for Q4 2018.
The survey, carried out in partnership with the Leeds City Region Enterprise Partnership, highlighted strong employment across the region but indicated a slowing in investment intentions.
Chamber chairman Gerald Jennings said: “Our results suggest that major decision making has been paused awaiting the outcome of Brexit negotiations. Whilst underlying factors such as sales and employment remain strong companies are holding making big investment decisions.
“Rising input costs also seem to be having an impact too, in part down to the double edged sword of currency volatility; we expect a greater number of companies will seek to pass on these additional costs in the next quarter.”
Roger Marsh, chair of the Leeds City Region LEP, said: “2018 has proven to be a changeable year for UK businesses. Despite uncertain times, companies in the Leeds City Region have shown their continual resilience by carrying out business as usual as much as possible. It’s encouraging to see that across the region confidence in profitability has increased in both manufacturing and service sectors in the last 18 months. A notable dip in business confidence in the last quarter however signals that businesses are feeling the uncertainty of Brexit.
Businesses are taking a pragmatic approach to planning for the potential impact of Brexit with many organisations starting to discuss tactics at a strategic level. The impact that the lack of clarity over leaving the European Union has had on businesses continues to be an issue. Going forward we will continue to make the case to Government to ensure the concerns of local businesses are being heard and that there are plans in place to for the continuation of economic growth post-Brexit.
The robustness of our services sector has meant the region has outperformed the national picture, with businesses ending the year on a three year domestic sales high. In our region the services sector represents 80% of businesses, so it is especially encouraging that domestic sales in the sector are reporting an upward trend. In line with the national picture manufacturing businesses are reporting a slowing in the pace of growth, with many manufacturers warning that costs of goods will need to increase, which may further impact sales into 2019.
Another theme arising regionally as well as nationally, is the clear message that businesses are experiencing difficulties recruiting the right workers to meet their skills needs. While it is encouraging to see that employment in the region is strong, skills shortages are continuing to hold back growth for many businesses. As a region, we are ambitious in our pursuit of creating more skilled jobs and securing these jobs for local people and we’ll continue to work with businesses as well as skills providers tackle the skills gap.
Looking ahead to 2019, a year that will bring challenges, I remain confident that businesses in the region will continue to deliver economic growth and prosperity in spite of a potentially turbulent economic environment.”