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BCC survey: Mixed picture emerges in Britain post-referendum

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Staff Writer | October 10, 2016
British Chambers of Commerce
Survey   Quarterly Economic Survey

The British Chambers of Commerce (BCC) published its Quarterly Economic Survey – Britain’s largest and most authoritative private sector business survey.

The survey is based on more than 7,000 responses from firms in Q3 2016 – which shows a mixed picture, with an improved short-term performance in the manufacturing sector set against a further slowdown in growth in the services sector.

The survey – the first covering the period after the EU referendum – shows that manufacturers enjoyed improved domestic and export sales compared with the previous quarter, with some benefitting from sterling's recent fall.

Meanwhile, the balance of service sector firms reporting improved domestic and export sales was at the lowest level seen since 2012.

The survey's results suggest that the UK economy is still growing - albeit at a lower level than before the referendum - and supports the BCC's forecast for growth of 1% in 2017.

The survey suggests that near-term uncertainty following the vote to leave the European Union has led businesses to lower their expectations for hiring, turnover, and investment in plant, machinery, and training.

Given this mixed picture, and muted business investment intentions, the BCC is urging the government to use next month's Autumn Statement to boost business confidence - by giving the green light to key infrastructure projects, and by introducing measures that 'crowd in' business investment and job creation.

Overall, the figures for both the manufacturing and services firms indicate growth, but at a slower pace than before the referendum.

In the manufacturing sector, the balance of firms reporting improved export sales rose to +17, from +9 in Q2 2016.

The balance of firms reporting an increase in advance orders is +12, up from +5. One factor may be the fall in sterling, which has made some UK manufacturers more competitive.

Domestically, the balance of manufacturers reporting increased sales rose to +13 from +9, although those reporting increased advance orders fell slightly, to +7 from +9.

In the last three months, the balance of manufacturers hiring more staff rose three points to +15 from +12, although in the services sector the number fell five points to +14 from +19.

Fewer firms in both sectors expect to take on staff in the next year. For services the balance for firms (+15, down 13) is the lowest since Q1 2013.

In the services sector, many balances saw a decrease on the previous quarter.

The balance of services firms reporting improved domestic sales fell sharply to +9 from +24, while the advance orders balance fell from +20 to +8 – indicating a significant slowing of growth.

On services exports, the balance of firms reporting improved sales fell from +11 in Q2 to +8 in Q3 2016, while the balance of firms reporting an increase in advance orders fell further, from +13 to +5.

Fewer firms in both sectors are reporting that they are confident that their turnover and profitability will improve in the next year, although both remain positive.

Firms in both sectors have reported that the exchange rate is a greater concern to their business than three months ago, with 30% of services businesses (up from 15%) and 48% of manufacturers (up from 35%).


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