GC SITUATION REPORT AND BUSINESS SURVEY RESULTS
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The global and UK manufacturing sectors are facing challenging economic conditions, with subdued goods spending and weak manufacturing PMIs. Inflation is starting to decrease in most economies, but households are cutting back on spending while firms' inventories build up due to easing supply chain blockages.
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The services side of the economy remains resilient despite the economic slowdown, supported by tight labour markets and consumer demand. However, services firms are experiencing rising costs due to higher wages, increased food and energy prices, and tighter monetary conditions. Trade data suggests that container flows are picking up, but goods exports remain weak, particularly in the electronics market. Economic activity has been more robust than expected, but inflation remains high.
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Business confidence remains strong overall, although firms still face challenges such as elevated costs, decreased sales, and minor supply chain issues. The survey shows a decrease in firms reporting late payments and cashflow problems, but this continued to affect a significant portion of businesses. However, most firms have cash reserves to last over six months. The construction sector shows the highest confidence in expecting increased profits, followed by other services and green technologies.
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Firms are looking to increase capital expenditure and invest in workforce development, skills, business model changes, and innovation. Access to new domestic sales opportunities, developing the business model, and managing overall business finances are identified as pressing challenges. The main areas of future support sought by firms include business planning, marketing, workforce development, innovation, and financial advice.
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The impact of the transition from the EU is mostly perceived as neutral, with a minority reporting negative or unsure impacts. Firms engaged in overseas trade express interest in expanding in both current and new markets, particularly within the manufacturing and engineering sectors. Recruitment activity is ongoing, with customer-facing and managerial roles in demand, but some firms are considering redundancies.
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Workforce skill gaps persist, with the most significant gaps identified in specialist technical skills, knowledge of products/services, and sales and customer handling roles. Firms plan to increase investment in workforce development, and a similar proportion of firms are also looking to increase innovation activity. The top sources of innovation are internal staff, clients/customers, and suppliers.
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The GC survey also includes questions about businesses' approach to social value and good employment, with a focus on guaranteeing minimum work hours, paying the Real Living Wage, offering flexible working options, involving employees in decision-making, promoting diversity, and healthy work practices. The majority of firms already implement these practices to some extent, with a notable percentage considering their inclusion in the future.
Archived Reports
2023
2022
2021
2020
For more information on this survey, please contact
Sabirah.Chowdhury@growthco.uk