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Good jobs, cashflow and competition: What we learned from Q2

13th Aug 2024

Last week, NI Chamber published the results of its Quarterly Economic Survey for the second quarter of 2024.

It is encouraging to observe a strong trading performance from a majority of NI Chamber members; most businesses who responded to this survey were trading either well (33%) or reasonably (50%) during Q2, which is the highest share since the start of last year. 

That steady business performance was accompanied by some signs of growth and positivity around the current trading environment. Almost all key indicators were positive in the second quarter of the year. Domestic and export order balances were positive, suggesting that more businesses are seeing stronger order books than those seeing any contraction.  

However, the results do indicate that cashflow is an increasingly pertinent concern, particularly for Northern Ireland’s manufacturing sector, whose cashflow position was lowest across the UK regions. In Q2 24, the manufacturing cashflow balance turned negative (-10%), which is its weakest position since the end of 2022. For service businesses, the cashflow balance also turned negative in Q2 24 at – 2%.   

A weakening cash-flow position not only highlights the need for good payment practices, but also underlines why policymakers must take note of the impact of the challenges businesses face when operating in a prolonged, high-cost trading environment. At NI Chamber, we will be maintaining a close watching brief on this important indicator. 

We know that access to people and skills has been a persistent challenge for our members, which is evident again this quarter. In fact, three in four members reported difficulties recruiting, while two in five said they are directly impacted by a very significant 48% increase to the minimum salary for a Skilled Worker visa. A notable share of firms also reported concerns about the business implications of immigration restrictions on cross-border movements, all of which is adding to cost pressures.

In February this year, the Economy Minister Conor Murphy announced that the creation of ‘Good Jobs’ would be a key component of his department’s Economic Vision. With the proposals currently out for consultation, we asked NI Chamber members to rate how important a range of interventions are for creating ‘good jobs’ for working aged people. 

The survey indicated that businesspeople consider improving careers advice to be the most important intervention, with 83% of survey respondents ranking it as ‘essential’ or ‘very important’. Other essential or very important issues include creating more and better apprenticeships/skills academies (81%), altering Northern Ireland’s economic structure to support industries that provide good jobs (75%) and investing in affordable childcare and fair pay for childcare workers (71%). 

Right now, the greatest external issue facing businesses is competition. There has been a significant drop in the share of members concerned about inflation compared to the same quarter last year but the figures are still high. In Q2 24 44% of manufacturers and 40% of services were concerned about inflation.  

For the most part, internal cost pressures have been easing, with the notable exception of labour costs which continue to dominate as the main internal pressure on businesses to raise prices, affecting four in five members. Two-thirds of manufacturers were affected by raw material costs and one in two businesses in both sectors were under pressure to raise prices because of utility costs.   

It is vital that the government in both Stormont and Westminster take these challenges for business and the implications for economic growth into account to enable businesses to meet their aspirations, to enhance this region’s competitive proposition and enable our regional economy to thrive. With a strong evidence base, that’s a very clear message we will continue to stress with policy makers across the board.