Finance

Humber’s emphatic economic bounceback stalls as inflationary fears mount

The emphatic bounceback seen as spring turned to summer has stalled, economic analysis by Hull and Humber Chamber of Commerce has shown.

Initial enthusiasm as the country came out of the final lockdown has been replaced by a more cautious reality, as increases in national insurance, energy prices, transport and food costs point to rising inflation and ultimately interest rate increases, the organisation said.

It is against this “rather bleak economic outlook” that home sales and home orders both fell back into negative territory.

Read more:Business activity surge curtailed by supply issues as growth slows to final lockdown level

The Chamber’s external affairs director, David Hooper, said: “It is clear that businesses in the Humber are facing a difficult period and there is considerable trepidation about what the future may hold, in the face of rising costs, supply issues and rising inflation.

“We hope the end of the furlough scheme will see some easing in the jobs market, with more vacancies being filled as previously furloughed workers return to work.

“However, there seems little doubt that it is going to be a tough winter for many as the public draw back on their spending as living costs rise, and a potential increase in interest rates looms on the horizon.”

Export orders and sales also fell back seven points, less than the five and 15 seen on the home front.

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Freight and logistics costs continue to be affected by Covid, not only in this country, but also in China where so many imports are sourced.

Employment in the last quarter also dropped back markedly, falling 31 per cent compared to the previous quarter, and 23 per cent fewer firms said they planned to increase their staff numbers in the next three months.

Recruitment also fell eight points compared to the previous quarter, but on a more positive note, there were more full time positions available and a small number of these vacancies were for permanent roles, however, 94 per cent of businesses said they had found it difficult to recruit the staff they needed.

Optimism has receded, with turnover and profit expectations both down markedly.

With a shortage of labour, pay settlements was the biggest pressure on prices, followed by overheads and finance, but raw material costs seemed to be stable.

The biggest external concern this quarter was inflation, up 23 points on the last quarter, along with fears of rising interest rates and business rates. Competition, down eight points, was less of a worry, as was tax.

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