Man hand holding painting brush, paint bright day with blue sky and white cloud on green grass field replace bad cloudy day with storm rain. Conceptual illustration of new better world, better day or optimistic vision.

 

As part of the Chamber Network’s regular intelligence gathering, the Quarterly Economic Indicator, run in partnership with the University of Strathclyde’s Fraser of Allander Institute, monitors the pulse of the economy and business sentiment. The Economic Indicator focuses on five key sectors: Construction, Financial and Business Services, Manufacturing, Tourism and Retail.

The survey highlighted the continual resilience of the Scottish economy, with the retail sector bucking the trend of several challenging quarters to show signs of positivity in the last quarter of the year, and growing optimism among financial and business services and manufacturing.

The crucial fourth quarter provided some much needed respite from challenging conditions for the retail sector, with financial KPIs such as sales and cashflow significantly more positive for retail than early 2017.

In contrast, the tourism sector, which had been a stand out performer in the third quarter, buoyed by exchange rate effects, was more subdued throughout the fourth quarter, which is in line with seasonal trends observed throughout our tourism data. Tourism firms continued to highlight business rates as their key concern, an area which remains a key priority for the Chamber Network.

The Financial and Business Services sector (which includes Oil and Gas) also displayed encouraging results, with sales and profitability figures rising to their highest levels for several years. Expectations were also high for 2018, however services firms noted taxation as a key concern, with over 40% of firms suggesting this may impact on their future plans. Investment levels were also somewhat below trend moving into 2018.

Linking in to our third quarter research, and ONS data, recruitment difficulties continue to sit at record highs for many of our sectors, including manufacturing and financial and business services.

Neil Amner, Chair of the Scottish Chambers of Commerce Network’s Economic Advisory Group, said: “Recruitment difficulties have continued to worsen for a number of sectors, particularly manufacturing, tourism and financial and business services, with the latter two sectors close to the highest levels ever measured in the survey.

“Many sectors are continuing to invest in training in an attempt to retain and upskill their existing staff, but it is clear that businesses are finding it challenging to fill vacancies. This continues to emphasise the need for Government to continue investing in our talent and skills base through initiatives including Developing the Young Workforce and Foundation Apprenticeships. In addition the need for a practical immigration policy to arise from the Brexit negotiations, which puts business first, is made even more critical by these conditions.”

Material costs were also cited as a major concern, impacting prices across all of our business sectors. The manufacturing industry in particular raised significant concerns, with 87% of surveyed businesses anxious about the rising costs of raw materials, and the impact this would have on their ability to maintain competitiveness.

The evidence and insight provided by Chamber members was invaluable in our efforts to represent the Scottish business community. As just one example, the data collected around recruitment difficulties was used to inform our written and oral evidence to the Finance and Constitution Committee, as part of the scrutiny of the Scottish Government’s draft budget.

Fieldwork for the Q1 2018 Quarterly Economic Indicator will begin in mid-February. To ensure the voice of your business is heard at a national level, get in touch with Shane Taylor by emailing staylor@scottishchambers.org.uk to join our survey mailing list and contribute to our economic analysis.