Service sector drives economy with 14% rise in salesJan 13, 2016
The report for Q4 of 2015 shows the service sector picked up more pace that their manufacturing counterparts, resulting in a 14% rise in UK sales activity in the service sector contrasted with a 1% rise by manufacturing firms.
Meanwhile advance UK orders in the service sector for the fourth quarter improved again when compared to the third quarter, whilst manufacturing firms saw a slight decrease.
However firms operating across both sectors reported weaker export activity in the same period. Respondents stated they had experienced an overall decline in export sales and orders with the services sector impacted the most – resulting in sales being in contraction territory.
The report reflected a noticeable decrease in manufacturing firms recruiting staff in the final quarter of 2015. There was a 30% increase in manufacturing firms experiencing difficulties in recruiting staff and a 20% rise in in service sector firms facing challenges.
The responses reveal that a higher number of service-based firms faced skills shortages in filling professional, managerial, clerical, skilled manual and technical roles, compared to their manufacturing counterparts.
However employment is set to pick up again, with 29% of manufacturing businesses stating their workforce would increase, and a third of service-based firms sharing the same recruitment ambitions.
Firms in both sectors have continued to express their commitment to investing in their companies. The report shows 96% of companies operating in the manufacturing sector stated their investment plans had increased or remained consistent with the third quarter. For those operating in the services sector the figure stood at 89%.
Competition was cited as the main external factor of concern for businesses during the fourth quarter. Exchange Rates was reported as the second external concern by manufacturers and this was likely to have been raised by those engaging in international trade.
Northamptonshire Chamber chief executive Paul Griffiths said: “Based on both confidence metrics – turnover and profitability – it is clear to see that the services sector is outperforming their counterparts in the manufacturing sector.
“The results show the service sector has been the lead driver of the local economy and this is also being replicated at national level.
“Despite the weaker performances of local firms in the export market, Northamptonshire Chamber believes there are many positive opportunities for growth from trading globally and, as the lead provider of international trade support in the county, we will do all we can to assist businesses in their export journey.”
Businesses in Northamptonshire remain positive with 94% of service sector firms and 79% of manufacturing firms reporting that confidence as measured by profitability was consistent with previous quarter or increased.
Meanwhile, 65% of service sector and 29% of manufacturing firms reported an increase in turnover.