quarterly economic review - Derbyshire and Nottinghamshire ...

About DNCC:Derbyshire and Nottinghamshire Chamber of Commerce (DNCC) is the UK’s second largest Chamber of Commerce.It has more than 3,200 members and 8,000 affiliates and helps businesses to connect, export, influence, recruit, expand,develop, prosper and grow.As the largest business organisation in the East Midlands, no other business support group can match the size, scale or voiceof DNCC. The Chamber helps its members to save money; raise their profile; access funding and tender opportunities; expandtheir horizons through exporting; recruit and develop their workforce; and meet new customers, suppliers and trading partners.To find out more about how being a member of the Chamber can benefit your business, email membership@dncc.co.uk orvisit www.dncc.co.uk.About this report:This report sets out the findings of DNCC’s Quarterly Economic Survey (QES) for Q3 2013.The QES is the region’s largest regular business survey, which provides and accurate benchmark of business and economicconditions in Derbyshire and Nottinghamshire on a quarterly basis.These regional results are fed into a national survey by the British Chambers of Commerce, which is the UK’s biggest andlongest-running private business survey and:• has provided consistent business and economic data since 1989• is a leading indicator of business confidence, often picking up big changes in the economy long before other surveys orofficial statistics• the Bank of England’s Monetary Policy Committee uses the QES as one of its key benchmarks when setting interest rates.• HM Treasury and the independent Office for Budget Responsibility use the QES to put together their forecasts for the UK’seconomic performance• the European Commission uses the QES to assess the health of the UK economy when it makes policy recommendationsfor both Westminster and Brussels• the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) use theQES when comparing the UK to competitors worldwideFieldwork for the Q3 survey took place online in August and September. There were 361respondents to the survey, 206 fromDerbyshire and 155 from Nottinghamshire. 138 were manufacturers and 223 were service sector companies.For more information about the survey contact Chris Hobson,Head of Information and Representation on 01246 207 207or email chris.hobson@dncc.co.uk2 Quarterly Economic Review | For more information call 01246 212 533

QUARTERLY ECONOMIC REVIEW - Q3, 2013The strong growth recorded in Quarter 2 was repeated in the third quarter as local businesses continued to build on strong UKsales and easing cash flows, according to the results of the region’s largest regular independent business survey.DNCC’s latest Quarterly Economic Survey (QES), which tracks business performance across a range of economicindicators to produce a quarterly “State of the Economy Index”, showed a continued increase in business confidence in thequarter. Following a rise of 74 points in Q2, the index rose a further 139 points in Q3 to reach 354 – the highest level sincemeasurements began six years ago.State of the Economy Index4003002001000-100Q32007Q42007Q12008Q22008Q32008Q42008Q12009Q22009Q32009Q42009Q12010Q22010Q32010Q42010Q12011Q22011Q32011Q42011Q12012Q22012Q32012Q42012Q12013Q22013Q32013-200-300Sales and OrdersHalf of (49 per cent) of respondents reported a Q3 increase in UK sales, with only one in 10 saying this had dropped. A further45 per cent of Derbyshire and Nottinghamshire businesses said that UK orders had also increased this quarter.The buoyancy continued into overseas markets, with 28 per cent of businesses reporting that sales for the quarter hadincreased and one in four (26 per cent) citing an increase in orders. The markets for business outside of the European Union wasseen as being slightly more positive than those within the EU, with 28 per cent of respondents reporting these as being the mostpositive, compared to 17 per cent for within the EU.DNCC’s International Trade team processed export documentation for goods and services worth more than £116m in Q3, withRussia, Turkey and the United Arab Emirates identified as the top three destinations.Companies responding to the QES, meanwhile, highlighted Australia, India and the USA as strong export markets.Business Confidence and Economic OutlookLooking ahead, business confidence in both profitabilityand turnover over the next 12 months jumped, with a net 53per cent of respondents expecting profits to rise over thefollowing year and a net 63 per cent predicting an increase inturnover.Four out of 10 respondents said they were currently operatingat full capacity – up from almost one in three (28 per cent) inthe previous quarter:Derbyshire andNottinghamshireChamber of CommerceDerbyshire andNottinghamshireChamber of Commerce@DNCC_Newsroom3

Reflecting the overall rise in confidence for the comingperiod, by far the greatest growing concern to businessescomes from increased competition (55 per cent), withrespondents also citing inflation (29 per cent), exchange rates(26 per cent) and business rates (21 per cent) as being moreof a concern now than three months ago:Some 26 per cent of respondents anticipated an increase intheir prices over the next quarter, with two-thirds (66 per cent)citing raw material costs as their biggest price pressure:Cash Flow and Investment IntentionsSupporting this rise in business confidence is the continuedimprovement in the provision of working capital to assistgrowing businesses, with 30 per cent of respondents sayingthis had improved over the past quarter.As a result more businesses are now starting to revise theirinvestment plans, with 31 per cent planning on greaterinvestment in plant and machinery equipment (up from19 per cent in Q2) and 27 per cent planning investment instaff development and training (up from 23 per cent in Q2),although for the majority the plans remain unchanged at thispoint in the year:4 Quarterly Economic Review | For more information call 01246 212 533

Focus on InfrastructureAs part of the QES, DNCC looks in more detail at specific themes being discussed at member meetings. This supports thedevelopment of DNCC policy activity and informs engagement with key local and national decision makers.In Q3, the survey explored the infrastructure priorities for business in Derbyshire and Nottinghamshire. Responses weregrouped into the following eight broad categories, listed in order of importance to respondents:• internet connectivity: listed as top issue for 56 per cent; cited by 45 per cent of all respondents• road connectivity: listed as top issue for 25 per cent; cited by 27 per cent of all respondents• rail connectivity: listed as top issue for five per cent; cited by 11 per cent of all respondents• improved public transport: listed as top issue for five per cent; cited by six per cent of all respondents• air connectivity: listed as a top issue for three per cent of businesses and cited as an issue by a further three per cent• increased housing supply: listed as top issue for three per cent; cited by three per cent of all respondents• improvements to existing buildings: listed as top issue for three per cent; cited by two per cent of all respondents• associated energy costs: listed as top issue for less than one per cent, but cited by four per cent of all respondentsIncreased internet connectivity and speed was by far themost popular issue, with a number of respondents specificallytalking about the importance of superfast broadband to thedevelopment of the rural economy.Road connectivity came in as the second most cited issue,with individual businesses highlighting the importanceof the completion of the ongoing widening of the A453,developing the A1 into a motorway and reducing congestionaround key junctions on the M1. A number of respondentsalso highlighted the significance of improving the smallerroads connecting the smaller hubs within Derbyshire andNottinghamshire to reduce travel times and improve links intothe larger transport network.Rail connectivity was the third most cited infrastructure issue,although respondents disagreed on whether investmentshould best focus on local rail travel or HS2 investment.Many businesses, however, did highlight the importance ofinvestment in both areas.Among the other issues raised, respondents drew attentionto the value of improvements to public transport withinDerby and Nottingham, with several referencing plans forthe Nottingham Tram network beyond lines 2 and 3. Theimportance of developing the region’s air connectivity wasalso raised, with the benefits to business of creating aninternational gateway for the Midlands, potentially reducingreliance on other air hubs, being identified.DNCC will be exploring these issues further with membersthrough its policy and representation work, ensuring it is ableto best promote the right investment in infrastructure to bestbenefit Derbyshire and Nottinghamshire businesses.6 Quarterly Economic Review | For more information call 01246 212 533

Derbyshire and NottinghamshireChamber of Commerce0844 443 2150www.dncc.co.ukDerbyshire andNottinghamshireChamber of CommerceDerbyshire andNottinghamshireChamber of Commerce@DNCC_Newsroom