Service businesses start strong recovery
A new survey of businesses in Lancashire suggest conditions are improving for local firms.
Firms within the service sector reported significant improvements particularly in domestic sales, increasing workforce, and cashflow.
The quarterly survey conducted by the Chambers of Commerce in Lancashire, gathered information from local businesses comparing how they have performed compared to the previous quarter and forecasting how they will perform in the next quarter.
For the first time since the start of the pandemic, service businesses are reporting growth over the last quarter and a positive outlook for the next three months. The biggest concern facing service firms is in recruiting staff, with 70% reporting difficulties in doing so.
Manufacturing, having started to recover in earlier quarters, have reported less clear growth but still show a generally positive trend. There are, however, some areas of concern for the sector’s businesses.
Exporting is still proving difficult with contraction in both sales and orders. Of major concern to manufacturers is the increasing cost of raw materials. 74% of forms in the sector believe their prices will have to go up with 89% citing raw materials as a factor. There are also concerns about inflation.
These rises in cost for the sector have seen reductions in investment, reduced cashflow, and less positive outlook for the year ahead especially with the regards to profitability.
Geoff Mason, policy manager at the North & Western Lancashire Chamber of Commerce said:
“It is fantastic news to see our service businesses seeing conditions improve as restrictions have eased. After a tumultuous year, many are still in a precarious position. So much depends on the final stage of the re-opening taking place and for there to be no further restrictions put in place.
“While the news for the last quarter is good and the outlook for the future positive, we must remember these are building from an historically low baseline. Challenges remain, such as recruitment, and further support may be required in the future.”
Babs Murphy, chief executive at the North & Western Lancashire Chamber of Commerce said:
“The cost and supply difficulties of raw materials is major concern. If these costs do not prove to be transitory, the long-term effects will be seen through a lack of investment in capital expenditure, training and recruitment. This comes at a time when investment in all of those areas is essential as with increase automation, digitalisation and the move to net zero.
“We have already met with Government departments, along with some of our members, to express our concerns. Action is required to prevent the recovery and rebuilding of the economy being stymied by inflation and a lack of investment.”
Download the report here