Chamber Q4 survey reports lowest ever reported international sales and orders

The final Quarterly Economic Survey (QES) of 2020 show export sales and orders are at their lowest ever recorded, with overseas sales moving from -27 to -60 and orders moving from -43 to -57.

Export documentation statistics further back up this decline with reporting a significant drop in November, after the numbers had been higher in September and October.

Also reporting overall export documentation figures to show no comparison to previous years.

Running from 2nd to 23rd November, coinciding directly with the announcement of a second national lockdown, the survey shows Tier 3 restrictions in Lincolnshire and a second national lockdown have hit business activity levels hard, along with levels of planned investment, recruitment, and confidence.

In comparison to Quarter 3 where we saw an upturn across all indicators and some improvements after the first lockdown, Quarter 4 however paints a different picture seeing all indicators further deteriorate.

Given the negative territory across the board, we see confidence levels take a hit, with the service sectors reporting greater activity decline, however noting these current levels aren’t as bad as those reported in quarter 2.

Full briefing can be seen here.

Join our QES Q4 Briefing to hear more about these results, taking place on 12th January, 8am – 8.45am, register here.

On a national scale, British Chambers of Commerce’s QES  found that business conditions remained weak in the fourth quarter as the second lockdown squeezed activity.

The bellwether survey of 6,203 firms, who employ nearly a million people across the UK, revealed that there was no fundamental improvement in the key indicators in Q4 and they remain well below pre-crisis levels. 95% of respondents were SMEs.

Key findings:

– Following the sharpest decline in the history of the QES in Q2 2020, all the key indicators in Q4 remained substantially worse than pre-pandemic levels

– 79% of hotels and catering firms reported a decrease in domestic sales in Q4, worsening from 66% in Q3

– Cash flow, a key indicator of business health, continued to deteriorate for 43% of firms overall. For hotels and catering firms, 77% report a decrease.

Business conditions

Overall, indicators remained weak in Q4, with only moderate improvement compared to Q3 and still well below the pre-Covid 19 trend.

– Nearly half of firms (43%) reported decreases in domestic sales, broadly unchanged from 46% in Q3

– 26% of firms reported an increase in domestic sales. 30% reported no change

– 45% of firms reported a decrease in domestic orders, while 33% report no change, and 22% report an increase

– 38% of firms reported decreases in export sales, down slightly from 45% in Q3 but still substantially worse than pre-pandemic levels, where only around 20% of firms reported a decrease

– Nearly a quarter (22%) of firms reported increases in export sales, up from 16% in Q3

Business to consumer (B2C) firms saw the largest falls in domestic sales in the quarter. Over three quarters (79%) of respondents in the hospitality and catering sectors reported decreases, compared to 66% in Q3 and is moving back toward Q2 levels (94%), underlining the impact that lockdowns and forced closures have had on demand.

However, the survey revealed that sectors which have continued their operations through the pandemic, and/or shifted their operating models to remote working, also have a higher proportion of firms reporting decreased sales. For instance, 53% of transport and distribution firms, and 44% of marketing/media firms reported decreases in sales, well above pre-pandemic levels of 29% and 23% reporting decreases in Q1 2020, respectively.

In the manufacturing sector, the balance of firms reporting increased domestic sales increased to -9% in Q4 2020, up from -15% in Q3 2020. The balance of firms reporting increased export sales increased to -8% from -26% in Q3

In the services sector generally, the balance of firms reporting increased domestic sales increased to -24% in Q4 2020, up from -25% in Q3. The balance of firms reporting increased export sales increased to -22% in Q4 from -31% in Q3

As a percentage balance, the manufacturing sector is seeing a faster rate of improvement in domestic and export sales, though both sectors’ indicators remain in ‘negative territory’, meaning that more firms have reported a decrease in sales than an increase.

Cash flow 

Cash flow, a key indicator of business health, continued to deteriorate for more than four-in-ten firms. In Q4, 21% of firms reported an improvement in cash flow, 36% reported no change and 43% reported a deterioration. Levels are broadly unchanged from Q3 which saw some improvement on historic lows in Q2.

In line with indicators from Q2 and Q3, micro firms were more likely to report worsening cash flow, with 51% of these firms reporting a deterioration, compared to 27% reporting a decrease in Q1 2020.

In the services sector the balance of firms reporting improved cashflow increased to -28% from -30% in Q3. After the lowest levels on record in Q2 and Q3, this balance is still lower than any other since Q4 2008.

In the manufacturing sector, the balance of firms reporting improved cashflow increased to -15% from -18% in Q3.