Businesses in Wales have demonstrated resilience and optimism in the second quarter of 2023 according to the latest Quarterly Economic Survey from Chambers Wales South East, South West and Mid.
The Chamber’s quarterly economic surveys are independent surveys of business sentiment and a leading indicator of UK GDP growth, with the results closely watched by policymakers.
The survey revealed a boost to business confidence in Wales in Q2, despite the ongoing challenges faced by the UK economy.
There were noteworthy improvements regarding cashflow, with fewer businesses experiencing worsening conditions compared to Q1. 31% of businesses in Wales reported an increased cashflow in the last three months, a figure higher than the national picture (25%).
Growing business confidence in turnover and profitability is also evident, with 60% of businesses in Wales expecting their turnover to improve in the next year and 53% predicting that profitability will also improve.
However, Welsh businesses continue to face challenges as 64% of firms stated that they are currently operating below capacity, primarily due to low order numbers for their goods or services.
Recruitment challenges persist, particularly for skilled manual, technical, professional and managerial roles, with 71% of businesses in Wales experiencing difficulties. Businesses are also under pressure to raise prices due to labour costs such as salaries.
Inflation also remains a top concern for businesses as although the peak appears to have passed, inflation figures did not fall as quickly as expected in April and stalled in May.
Paul Butterworth, CEO of Chambers Wales South East, South West and Mid, said: “Despite lingering challenges, the results of our latest survey highlight minor improvements compared to Q1, showcasing the resilience of the Welsh business community.
“It is encouraging to see Welsh businesses looking forward with optimism. We hope that this confidence can be sustained in Q3 and Q4 if inflation continues to ease, allowing businesses to have certainty to be able to invest in their future.
“However, as we see consistently in our surveys, businesses face barriers in the form of recruitment and skills which obstruct them from realising their growth potential. Action is required, whether that is support or investment, to help employers with skills development and training to support their existing workforce and attract new employees.”