The Welsh Business Barometer is a pan Wales quarterly survey completed in conjunction with the West Cheshire & North Wales Chamber of Commerce. This timely survey is used by decision makers to see the state of the economy in Wales. More about the Welsh Business Barometer can be found here.
Our results were released in a business breakfast today in Llanelli, with speaker Adam Price, the current AM for Carmarthen East and Dinefwr.
The main message of the survey is that Welsh businesses are working through uncertainty despite post-referendum slowdown continuing in economy.
Adam Price, AM
Please see attached our Welsh Business Barometer Document for all the facts and figures, below in a summary.
The economy in Wales is still growing with more businesses telling us that their sales are increasing than decreasing and more businesses telling us that they are increasing their workforce than decreasing it.
That gap is however closing leading to concern that the slowdown we experienced following the Brexit referendum result is continuing.
Whilst there are areas of concern; the number of businesses experiencing difficulties recruiting has risen again and more businesses are predicting that their profits will fall during 2017, there is still lots to be positive about in this Welsh Business Barometer.
A rise in the number of businesses experiencing increased export sales and orders, improvements in training investment figures and over half of businesses expecting their turnover to increase jall indicate that Welsh business are doing their best to trade through the uncertainty and are looking to seize opportunities as they arise.
Overall, our findings suggest growth will continue in 2017, albeit at a more modest pace. The government must act strongly this year to support investment and improve the business environment – both of which are crucial to boosting business confidence, and therefore further growth.
The barometer shows that the UK market grew during the last quarter of the year but with growth the slowest it’s been throughout 2016. With no firm proposals on the table of what Brexit will look like, the cost of imported raw materials increasing and an expectation that inflation will rise in 2017, this is a sign of a lack of confidence in the economy.
The overall figures for exports is showing signs of stability even though the export market is continuing to slow. This does however hide some important changes happening in international markets. The ability of many of our exporters to be more competitive on the international stage due to the low pound has led to a rise in the number reporting increasing exports. However, we’ve also seen a rise in the number reporting falling exports. Although some of this will be down to global uncertainties following the referendum, the US presidential elections or terrorism attacks it does show how important it is for Welsh businesses to diversify and keep looking for new international markets.
Labour Force & Recruitment
Businesses are continuing to grow their workforce at roughly the same rate as the previous quarter. This rate of growth is however down from earlier in the year indicating that many businesses are holding off investing in increasing their workforce until they are clearer on what Brexit means. These is still a significant proportion are looking to grow though.
The number of businesses recruiting has remained constant throughout 2016 as well. The trend of around two-thirds of businesses experiencing difficulty recruiting continues too. This is a worry as the expectation amongst the business community is that restricting free movement across Europe will make it harder to recruit staff with the required skills.
The fourth quarter of 2016 saw an improvement in businesses’ cashflow and businesses increasing their investment in training and machinery. Investing in training is particularly important if businesses are finding it difficult to recruit staff who already have the right skills. While there seems to be businesses already investing in anticipation of Brexit many are holding off until they have more certainty over the future.
Overall significantly more businesses are confident of the future than not, but confidence is continuing to fall. Our prediction is that business confidence will continue at this rate until we receive more clarity over what the outcomes of Brexit will be.