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Economic Slowdown Has Bottomed Out

The economic slowdown appears to have bottomed out, according to companies in Coventry and Warwickshire responding to the economic survey by The Chamber for the first quarter of the year.

"The service sector continued to prosper and one in four manufacturers reported increased sales-while one in five expect to do better in the second quarter of 1999,"

said a spokesman for the Chamber of Commerce, Training and Enterprise.

"Even exporters were more positive-with one in five saying sales had increased, restoring the situation of 12 months ago-although our analysts are cautious about the low number responding."

The number reporting decreased sales fell from 50 to 40 per cent, the lowest figure for 12 months. Advance export orders were up by a slightly better 23 per cent.

"Our analysis is that the export market, particularly for the manufacturing sector, has started to show signs of a move towards stability,"

The Chamber spokesman said.

Optimism showed through on the jobs front across nearly 200 companies replying. Between them they employ more than 12,000 people.

A quarter of manufacturers had increased their workforces, closing the gap on the 27 per cent who had reduced labour.

And a quarter expect to take on more people in the next three months-double the forecast of the previous quarter.

In the service sector three in ten firms had increased staffing levels, and the same number expect to add more people in the next three months.

"However consumer confidence is still having a marked effect on sales at home, with a marked contrast between manufacturing and the service sector," the spokesman added.

Manufacturers domestic sales were up by 28 per cent, compared with 18 per cent the previous quarter. The service sector saw only a small decline, with 37 per cent reporting increased sales, against 40 per cent the previous quarter.

Business confidence was considerably higher in the service sector, with nearly 70 per cent expecting turnover for the year to increase and over 50 per cent expecting increased profitability.

In manufacturing 44 per cent expect to increase turnover, compared with 32 per cent last quarter-and an average of 33 per cent over the last four quarters.

The number expecting to make more profit also went up from 28 to 35 per cent -balancing the number who expect profits to be cut. This is a significant improvement on the last quarter of 1998, when 44 per cent believed profitability would be hit.

And 30 per cent reported increased cash availability-double the figure six months ago.

On prices 12 per cent of manufacturers forecast increases, compared with 29 per cent in the service sector.

The Chamber spokesman said:

"Nevertheless it is not going to be an easy year.

"Half of all companies in both the manufacturing and service sectors said competition was their biggest problem, although this is an improvement for manufacturers on three months ago when nearly 60 per cent quoted competition as their main difficulty.

"And 36 per cent of manufacturers still worry about exchange rates."

Pressure from pay increases went up from 20 to 31 per cent in the service sector, but fell over a point to 30.6 per cent in manufacturing.

MORE INFORMATION:  Barry Lloyd-Jones   01203 654260

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CWN / Business / The Chamber / 26 Mar 1999

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