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Prices to rise, profit & business confidence drop

Price rises expected; profit and business confidence flatten off

A sharp jump in the number of companies expecting prices to rise is being reflected in a flattening off of both profit expectations and business confidence, according to the Employers and Manufacturers Association Survey of Business Conditions for February.

The survey of northern manufacturers shows 31 per cent of respondents are now expecting price rises, up from 19 per cent for the January survey. The numbers expecting profits to improve has approximately halved from 48 per cent in January to 26 per cent this month. Confidence is down, from 48 per cent expecting an improvement last month, to 22 per cent this month. However the scores for those expecting both profitability and confidence to stay the same went up substantially.

“The cost of accident insurance is one of the change factors affecting the outlook on price rises,” said Bruce Goldsworthy, director of EMA’s Manufacturers’ Division.

“Two months ago the survey had not begun to register any cost concerns from ACC; last month five per cent of respondents noted it, and this month 13 per cent are saying they think it could result in price rises because of anticipated higher workplace accident insurance costs.

“The number of respondents expecting to lift their prices because of higher raw material costs brought about by the low exchange rate and other factors, has gone down, to 53 per cent this month from 63 per cent last month.

“In spite of the flattening off trend, the demand for more staff is on the up and up. The number of respondents expecting to increase their staff has doubled from 11 to 22 per cent over the past month while those reporting difficulties recruiting skilled staff continues to grow.

“This month 56 per cent reported skilled people on the labour market are scarce; last month the figure was 45 per cent and the month before that, 33 per cent.

“For the third consecutive month investment intentions have remained high and stable, which augurs well both for developing more skills and plant capacity. 74 per cent say they will be investing in training, and 63 per cent in more equipment.

“Overall, average domestic turnover for February increased by 7 per cent, and export turnover by 9 per cent compared to the same period 12 months ago.”


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