Business News Round Up (03/11/2022)
Manufacturing output falls as skills worries hit highs
UK manufacturers reported a further fall in output in the three months to October but expect production to pick up in the coming quarter, according to the CBI’s latest quarterly Industrial Trends Survey. However, with costs growth remaining exceptionally strong and the share of firms citing worries about access to skilled labour reaching a 49-year high, business sentiment fell for a fourth consecutive quarter, and at the fastest rate since the early days of the covid pandemic. The survey, based on the responses of 279 manufacturing firms, found that output in the three months to October fell slightly, and at a similar pace as in the quarter to September. However, firms expect output to increase slightly in the next three months. Output fell in 11 of 17 sub-sectors, with the overall decline driven largely by paper, printing & recorded media, and metal manufacturing. The share of firms citing a shortage of skilled labour as a factor likely to constrain output over the next three months reached its highest level since October 1973 (49%, from 39% in the quarter to July). The proportion of firms citing materials/components availability as a constraint on output fell for the second successive quarter (54%, from 63% in the quarter to July and 71% in April, which was the highest reading since 1975).
Scottish construction market slows as rising costs weigh on expectations
The slowdown in the Scottish construction market continued in the latest quarter, with surveyors now pointing to the weakest period of growth since the beginning of last year. The third quarter Royal Institution of Chartered Surveyors (RICS) Construction & Infrastructure Monitor showed a net balance of +10% of Scottish respondents said that workloads grew, compared to +19% in the second quarter and +39% just five quarters ago. This trend of a slowdown in activity corresponds with a deterioration in the outlook too. Expectations for the year ahead fell to their lowest level since the beginning of the pandemic as issues with skills, costs and credit conditions weigh on firms. The net balance for workload expectations is now -1% of respondents, compared to +25% last quarter and +46% at the end of 2021. Looking at the current workloads, all sub-sectors other than private commercial saw growth in the third quarter, however, the growth that is being reported is slower than it was. In the case of private housing workloads, a net balance of +15% said that there was a rise in the third quarter, but this was down from +18% in the second and +37% at the end of last year. The major challenges facing firms at present continue to be material costs and labour shortages, with 60% of respondents reporting shortages of quantity surveyors, 62% reporting shortages of other professionals, and 59% reporting shortages of bricklayers.
https://www.insider.co.uk/news/scottish-construction-market-slows-rising-28388058
UK businesses say tech is key to unlocking economic growth
Amid the rising cost-of-trading and economic uncertainty, the majority (65%) of business leaders from medium-sized UK companies say technology is the biggest driver of growth. However, a third (33%) say tech is their biggest internal challenge, according to new research by Virgin Media O2 Business. Virgin Media O2 Business’ research reveals the role that tech and connectivity can play in helping medium businesses (those employing between 11-249 people) to adapt and grow during tough financial times, including the current cost of living crisis. The findings show that almost 9 in 10 (87%) business leaders say they’ve noticed an improvement in productivity when they provide employees with new technology, while 77% believe it helps to boost morale. It comes as medium businesses put in place their long-term hybrid working practices. The study finds that on average, medium business employees now spend just a quarter (25%) of their time in offices, with seven in ten businesses (70%) having more mobile connections compared to a year ago.
More than a quarter of tourism businesses in south of Scotland contemplating permanent closure as operating costs skyrocket
The results of an in-depth ‘barometer survey’ of tourism and hospitality businesses in the South of Scotland paint a concerning picture of the difficulties many operators face in a worsening national and global economic climate, with one describing the cost of living crisis as ‘much, much bigger than Covid as a risk to business survival and growth’. Published today, the findings of research carried out by the South of Scotland Destination Alliance (SSDA) are a mixed bag, showing that while a majority (over 70%) are neutral or optimistic about their trading and turnover prospects in the coming year to two years, there is currently widespread and growing concern among many tourism and hospitality businesses in the region, who face increasing challenges to ‘keep the lights on’ as costs and inflation soar and consumer confidence dips. The vast majority of self-caterers and B&Bs expressed serious concerns about the impact of forthcoming short-term let licence requirements on their business, with two thirds of self-caterers in favour of the legislation being paused.