• Swindon & Wiltshire Economy
• Tuesday July 2 2024
• Author Name: Peter Davison

Labour market remains a critical issue for South West businesses, says Business West

The labour market remains a critical issue for South West businesses, with nearly seven in ten firms reporting difficulties in recruiting, according to Business West.

Business West’s latest Quarterly Economic Survey, which polls businesses across the South West, found 69 per cent reported difficulties in recruitment, particularly for skilled manual/technical and professional/managerial roles.

Eight in ten (79 per cent) of respondents said they are currently recruiting for full-time positions and 49 per cent for permanent positions.

General economic conditions and business uncertainty remain the top concerns, with 62 per cent and 51 per cent of businesses respectively.

Concerns about inflation have eased slightly, but it remains a significant issue for a quarter (25 per cent) of respondents.

A significant number of survey comments indicate that political events, such as elections and changes in government policies, are major concerns for businesses. This uncertainty impacts their confidence and planning.

Matt Griffith, director of policy at Business West, said “These findings underscore the ongoing recruitment challenges and capacity issues faced by businesses.

“Addressing these concerns is crucial for enhancing productivity and growth in the region.

“Further focus on skills development and workforce planning could be instrumental in mitigating these challenges.”

“The business landscape is grappling with ongoing economic challenges and moderate optimism in specific areas. There is a slight improvement in confidence regarding the UK economy, but businesses still face significant uncertainties and pressures.

“However, the election outcome, whatever that may be, will at least bring businesses some certainty and a government that will set out an economic strategy for the next five years.

“This should help our businesses to plan.”

Domestic sales remained positive in Q2 with a net balance of five per cent, indicating resilience despite broader economic challenges.

Manufacturers reported stronger performance compared to businesses in the service sector. The net balance for export sales stood at one per cent. Manufacturers show a stronger performance (16 per cent), while services still face challenges (-8 per cent).

The Q2 results reveal a trend towards price stability among businesses, with 61 per cent reporting that their prices remained constant over the past three months. However, it is relevant to highlight that a considerable 35 per cent of participants increased their prices, while only a small proportion, five per cent, reduced them.

Other findings include:

• Confidence in individual business prospects also reflects resilience, with 57 per cent of participants having a positive outlook for their next twelve months. Although this has declined by six per cent since March.
• Confidence in the UK economy shows a modest improvement, with a net balance of -21 per cent (compared to –26 per cent in Q2).
• Profitability forecasts are moderately optimistic, with 46 per cent expecting improvement, but they lag behind turnover expectations (52 per cent).
• Labour costs are the most prominent, affecting 66 per cent of businesses, followed by utilities (46 per cent), raw materials (38 per cent), and fuel (29 per cent). Other notable pressures include finance costs (21 per cent) and import costs (17 per cent).
• In Q2 2024, cash flow challenges persisted across all sectors. The net balance for cash flow was -8 per cent, with 24 per cent of businesses reporting increased cash flow and 32 per cent experiencing a decline.
• Over the past three months, the availability of finance has shown mixed results. Only six per cent of businesses reported an improvement in financial availability, while 38 per cent reported no change, and 17 per cent experienced a deterioration.

Local business reactions

Phil Marsh, CEO of S&B Automotive Academy, Bristol said: “We are unsure how things will differ with a change of government. Around 70 per cent of our business is supported by apprenticeship training. We are unsure how this will be impacted by changes in policy and how funding will be impacted. Economy and inflation play a big part in buying resources. Our numbers are improving and things are currently looking much better for us.”

Douglas Douglas, owner of Avon Valley Adventure and Wildlife Park, Bath, said: “Higher taxation is suffocating businesses and not allowing them to grow.”

Michelle Graham, co-founder & director of Niche Recruitment, Chippenham, said: “Potential change of government always causes unsettlement in the labour market and we expect to see the upcoming general election have an impact on the confidence of the economy, just as it starts to settle.”

“We have seen a slowdown in the number of roles currently being hired for and feel this is due to uncertainty and lack of confidence in the UK economy. With the general election looming 2024 has got off to a slower-than-anticipated start.”

Business West operates the Chambers of Commerce in Bristol, Bath, Wiltshire, and Gloucestershire.

The local figures will be fed into the national Quarterly Business Survey from the British Chambers of Commerce – Britain’s biggest and longest-running private business survey.

The survey, a leading indicator, often picks up changes in the economy long before other surveys and official statistics and consistently mirrors trends in official data. It remains closely watched by both UK Government and the Bank of England.

Latest: South West businesses report cautious optimism amidst a challenging economic environment