Welsh businesses are reporting that they have experienced a decline in UK and international sales during the second quarter of 2015, indicating that there is a deceleration in economic growth, according to the latest findings from the Chambers of Commerce in Wales.
The Quarterly Economic Survey, released today (07 July 2015) by the South and Mid Wales Chambers of Commerce and the West Cheshire and North Wales Chamber of Commerce, has revealed that fewer businesses (79.9%) are reporting improving or consistent sales in UK markets, a decrease of 6.8 percentage points from the first quarter of 2015.
The survey, which monitors the performance of businesses across Wales and acts as an indicator for the strength of the Welsh economy, also showed that the number of businesses reporting improving export sales has fallen by almost 10 percentage points from 51.2% to 41.3%.
Likewise the survey indicates that both UK and export orders have slowed down with the number of organisations reporting an increase in orders falling by 5.1 percentage points (to 35.8%) and 13.3 percentage points (to 37.3%) respectively.
Commenting on the latest figures, Keith Palmer, CEO of the South Wales Chamber of Commerce, said: “On the surface, the decline in UK and export sales is worrying, but the percentage of businesses reporting an increase is still at around 40% and has been there or thereabouts for the last year or so.
“That said, a decline in UK and export orders is more of a concern as a decrease here usually correlates to a reduction in sales the following quarter too, so we should be prepared for a further slowdown in growth later this year.
“While Welsh businesses aren’t reporting the same level of growth as the last few quarters, these figures indicate a slowdown rather than anything too negative. They serve as a timely reminder that businesses must continue to focus on growth to ensure that the economy continues to strengthen following the end of the recession.
The survey also found that the percentage of companies that experienced difficulties in recruiting during the second quarter of 2015 has increased for the sixth successive quarter by almost 10 percentage points (from 62.6% to 72.5% of businesses surveyed). This is against a backdrop of almost a third of businesses looking to recruit during the next three months (32.3%).
Mr Palmer continued: “With yet more businesses reporting recruitment challenges, the need to invest in upskilling the current workforce and ensuring young people are work-ready is more important than ever.
“This is a downward trend which has been apparent for months, if not years, and there needs to be a concerted effort from public, private and academic sectors to work in partnership to ensure that the skills gap in Wales is addressed. It is only through doing this that Wales will have a workforce in place capable of meeting business requirements and we will be able to foster sustainable economic growth.”
Despite a decline in UK and export sales, more businesses indicated that they are increasing their investment in equipment in quarter two of 2015 (41.3%), a figure that has remained fairly consistent or increased since the beginning of 2014. This is against a backdrop of fewer business (43.4%) increasing their investment in training, a reduction of 1.3 percentage points on the previous quarter.
Mr Palmer added: “We are pleased to see an increase in companies investing in more equipment as this indicates that, despite a slight decrease in sales and orders, businesses are confident of an upward trend, a welcome sign for Wales’s productivity and improving economic output.
“Nonetheless, it is important that organisations continue to invest in their own workforce through training to ensure that Wales has an evolving workforce which is readily able to adapt to changes in market demands, as required.”