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Quarterly Economic Survey - Q4 2024

Introduction

The following report uses data taken from the Quarterly Economic Survey carried out by the Chamber from 11/11/24 and 09/12/24 in the fourth quarter (Q4) of 2024. This regular survey asks businesses a series of questions on key economic indicators.

Summary

In total, there were 292 responses. Of these, 38.0% can be broadly classified as Manufacturers and 62.0% as Service Sector businesses.

Out of 292, 38.0% of respondents were micro, 34.0% were small and 20.0% were medium-sized businesses. 8.0% of respondents were large businesses.

46.0% of respondent businesses were active in international markets.

Wider Economic Context

The unemployment rate for East Midlands reported by the Office for National Statistics (ONS) decreased by 0.5% compared to the previous three-month (February to April 2023) period to 4.9% in the May to July 2024 period. Youth (16-17 years) unemployment decreased from 26% to 16.1% over same time period of February to April 2024. Nationally, the number of job vacancies for the period of June to August 2024 was 857,000 showing a further fall in the number of vacancies by 42,000 from March to May 2024 peiod. This was 26th consecutive decline in number of job vacancies with number decreasing in all 18 industry sectors.

According to Bank of England’s latest Monetary Policy report, inflation is likely to rise temporarily with interest rate cut to 5%. Looking at the exchange rates, the GBP stands at €1.17 in September’24 – constant as compared to March’24. The latest data from Department for International Trade (Q2 2024) show exports valuing £6.46 billion from the East Midlands region.

Region at a Glance

*Net Value = Increase - Decrease

State of Economy Index

Compared to previous quarter, the current quarter saw steep fall in the state of economy index. The value for fourth quarter of 2024 is -72.

Results

For businesses involved in the UK market, looking at the past 3 months (excluding seasonal variations), has your activity/sales/custom: (trend over 4 quarters)

For businesses involved in the UK market, for the next 3 months (excluding seasonal variations), have orders/advanced custom/bookings: (trend over 4 quarters)

For businesses involved in overseas markets, over the past 3 months (excluding seasonal variations), has your activity/sales/custom: (trend over 4 quarters)

For businesses involved in overseas markets, for the next 3 months (excluding seasonal variations) have orders/advanced custom/bookings: (trend over 4 quarters)

During the last 3 months, has your labour force: (trend over 4 quarters)

Over the next 3 months, do you expect your workforce to: (trend over 4 quarters)

Have you attempted to recruit within the past three months? (trend over 4 quarters)

If you have recruited over the past 3 months, did you experience any problems in finding suitable staff? (trend over 4 quarters)?

For which job types did you experience a problem: (latest quarter Q4 2024)

If you have recruited over the past 3 months, what type of positions were they: (latest quarter Q4 2024)

During the last 3 months, has your cash-flow: (trend over 4 quarters)

Are you currently operating at: (trend over 4 quarters)

Over the next 3 months, do you expect your prices to: (trend over 4 quarters)

Is your business currently suffering pressures to raise its prices as a result of any of the following: (trend over 4 quarters)

What changes have you made to your investment plans for plant / machinery / equipment: (trend over 4 quarters)

Over the past 3 months, what changes have you made to your investment plans for training: (trend over 4 quarters)

Over the next 12 months do you expect your turnover to: (trend over 4 quarters)

Over the next 12 months do you expect your profitability to: (trend over 4 quarters)

Which of the following are more of a concern to your business than 3 months ago: (latest quarter Q4 2024)

Chamber Commentary

Downturn in East Midlands business confidence says latest research

The Q4 2024 business indicators paint a difficult picture for East Midlands businesses right across the board - from sales to price pressure, recruitment to the level of confidence in profit and turnover, with all key indicators showing notable decline.

If we break down what's going on, it's clear several headwinds are at work, impacting expectations and experience. Weakness in demand is driving a drop in sales and orders in the UK and internationally, while we're seeing a pattern of protective measures creeping in as businesses seek to contain their cost base. That's demonstrated by things like a pullback on intended investment in plant, machinery and training.

This stall in investment intention is further underlined by a dip in recruitment. On one hand we have the skills gap making hiring the right candidate difficult, but seeing a 9% drop in businesses attempting to recruit in the first place is a concern. That suggests businesses are, for now, hitting the pause button on hiring as another protective layer, but what we don't know, at this stage, is whether this will be a sustained trend going forward or is a knee-jerk following the Autumn Budget. We heard NI contributions for businesses would rise to 15% from next April, the threshold for payment drop and the national minimum wage increase. The emerging picture in the East Midlands is a widespread tightening of the belt and it's telling that labour costs were reported as the greatest force behind price pressure.

There are signs of resilience within the findings of the survey, with 60% of businesses expecting to hold steady on investment intentions in plant, machinery and equipment, for example, but with the overarching picture showing the extent of downturn in confidence and experience across so many measures, it’s absolutely essential that political leaders prioritise supportive measures for business in the East Midlands.