Economic performance in Greater Manchester has declined slightly in Q3 2023 according to the findings of the latest Quarterly Economic Survey (QES) conducted by Greater Manchester Chamber of Commerce (GMCC).
The headline Greater Manchester Index™, a composite indicator made of key QES measures, decreased to 20.4 (22.1 in Q2 2023).
The survey of nearly 300 businesses held between August 16th and September 11th revealed that sales to UK customers decreased in manufacturing and construction, while services showed a marginal improvement.
Manufacturing sector businesses reported a sharp reduction in domestic demand in Q2 2023 and that appears to continue in Q3. However, businesses in the sector also reported a healthier order book, which indicated that there might be some improvement in the coming months. The construction sector has now recorded three quarters of declining demand. This is consistent with the findings of other surveys and data from the Office for National Statistics (ONS). New orders in construction have steadily declined since Q3 2022.
International trade data is particularly worrying. Businesses in both manufacturing and services reported that export sales and advance orders from overseas customers decreased in this quarter, a finding that matches data published by the ONS.
The survey results also show a mixed picture in other important economic indicators such as business confidence. Fewer businesses reported that they were optimistic in maintaining their turnover and profitability, which could be an indication that economic uncertainty and concerns around demand are affecting confidence levels.
Subrahmaniam Krishnan-Harihara, Deputy Director of Research at Greater Manchester Chamber of Commerce, said: “The Greater Manchester IndexTM has now declined in two continuous quarters. This is a clear sign that dark clouds are gathering and denting optimism. If the message earlier in the year was one of economic resilience, the current findings indicate uncertainty and a flatlining economy.”
“Businesses will be relieved that inflation has eased and the fact that the Bank of England, in a surprise move, maintained the base rate at 5.25%. Although inflation is no longer the primary worry for GM businesses, many survey respondents were concerned about high interest rates, which has clearly affected liquidity and the ability of Greater Manchester (GM) businesses to raise finance for investment. Moreover, higher prices are here to stay.
“Amidst the economic concerns, recruitment activity remains steady in GM. There has been an increase in recruitment for part-time and temporary roles, perhaps a sign that uncertainty is forcing businesses to be cautious with recruitment. Sectors that are currently recruiting include wholesale and retail, hospitality, health and social care and professional services. It is noteworthy that manufacturing sector recruitment has declined.
“The latest retail sales data shows that people are still willing to make purchases. Spending on hospitality and leisure is also stable. With inflation easing, prices are unlikely to increase further, which could give a fillip to the high street. In the absence of any noticeable improvement in business investment, we are once again reliant on the British consumer to sustain the economy and in the lead up to the festive season, consumer spending could well be the saving grace.”
