ECONOMIC uncertainty remains across Milton Keynes as difficult trading environments battle cautious optimism, according to the results of Milton Keynes Chamber of Commerce’s latest Quarterly Economic Survey.
Covid-19 continued to affect local companies in the last three months of 2021. Manufacturing faced supply chain shortages and hiring difficulties as inflationary pressure continued to mount.
However, the local service sector remained upbeat with an escalation in new orders both domestic and overseas driven mostly by improved market conditions through a sustained lifting of restrictions and a loosening of limits on international travel.
Almost a third of firms in the services sector increased their workforce in the final months of the year and many expect their teams to remain constant in the first three months of 2022.
Orders from UK firms increased as Covid restrictions were eased, with 46 per cent of survey respondents reporting a rise in sales. Manufacturers said that their order books had either remained steady or increased compared to the previous quarter.
Business confidence is slowly improving for manufacturing, with a large majority of businesses suggesting that they expect turnover to increase in the coming 12 months. But many expect a fall in profitability.
The services sector remains upbeat, forecasting that both turnover and profitability will increase in the coming 12 months.
Milton Keynes Chamber policy officer Sean Rose said: “We find ourselves in a familiar situation with Covid-19 case rates rising due to the emergence of the Omicron variant and another bout of restrictions being put in place to curb its spread.
“This will undoubtedly raise concerns among local businesses on how rising case rates domestically and overseas could impact demand levels, exacerbate any current labour/supply shortages and further price pressures. However, the impacts could be short-lived if the new variant is efficiently brought under control.”
Many businesses have continued to be significantly impacted by ongoing supply chain issues, as well as increased raw material costs and longer lead times which appears to be having a subsequent impact on cashflow levels, the Chamber adds.
The overseas orders uptick for the services sector is in line with the national outlook for exports after the loosening of travel regulations. Despite this increase, manufacturing firms are not seeing similar post-Covid highs and all sectors reported that overseas orders both current and advanced remained constant or decreased when compared to Q3.
The Chamber says the difficult export environment may be due to reports of weaker demand from China and disruption to EU trade, partly due to ongoing complications with the EU transition. Overseas orders may have been cancelled due to extended lead times and supply shortages.
The QES is part of the biggest and most representative survey of its kind in the UK. QES data is used by the Bank of England to inform interest rate decisions, by the Treasury to help formulate economic policy and by international finance institutions to assess the UK’s economy.