The third DHL/BCC Trade Confidence Index, a measure of the UK’s exporting health, reveals thatgrowth among UK exporters slowed during the last quarter of 2011 after good growth during last year
and the outlook for 2012 is modest.The index, which draws upon a survey of over a thousand exporters and an analysis of exportdocumentation (required of all UK companies exporting goods outside the EU), shows a muted outlookfor domestic and international trade activity in 2012.
Trade documentation data for UK goods exports in Q4 2011 shows a 3.7% increase on the samequarter last year, demonstrating that growth in export goods continued. Additionally, a third (34%)of respondents stated that their export orders increased in Q4, comparable to 35% in Q2 and Q3respectively, the survey found.
Despite worsening confidence about the general business situation amid concerns over theslowdown in the world economy, the balance of UK manufacturing firms reporting an increase in theirdomestic orders saw a marginal swing from -2% in Q3 to +2% in Q4. Furthermore, the balance ofmanufacturing firms reporting an increase of profitability confidence rose from +32% to +36%.
However, overall the survey results also show that firms recorded weaker export orders thanexport sales, suggesting a slowing of export growth towards the end of the year. A quarter ofexporters (25%) have seen a decrease in export orders over the last quarter, compared to 24% in Q3,22% in Q2, and 12% in Q1.
With slowing export orders and sales, many exporters feel less confident in increasing revenueand profitability, and are therefore delaying decisions to invest and take on more staff, DHLpointed out. For example, the percentage of exporters confident of increasing their profitabilitydropped back from 50% in Q2 to 48% in Q3 and 43% in Q4. Moreover, British exporters’ plans to takeon more staff in the next quarter are subdued and only a fifth (20%) of firms expect to take on newstaff in the next three months.
Commenting on the results of the index, Phil Couchman, CEO of DHL Express UK and Ireland said: “With the latest figures in the report showing a weakening in export orders and indeed overallbusiness confidence, the reluctance from exporters to invest is a concern. However, factors such asa flat base rate and government forging closer ties with international markets, such as making theUK a leading offshore trading centre for the Renminbi, could give UK businesses a competitiveadvantage.
“There are plenty of success stories out there of fledgling companies beginning to export intoforeign markets. An increasing number of UK exporters are seeing flourishing e-commerce sales tothe continent and further afield, specifically Australia – as disposable income and favourableexchange rates across the Pacific create inroads for British goods. With our pre-existing marketsstruggling, it’s essential that exporters set their sights on new faster-growing trade partners.And now is the time to begin.”
John Longworth, Director General of the British Chambers of Commerce, said: “The latest DHL/BCCTrade Confidence Index shows that the increase in export orders seen after the recession continues,but the pace of this growth has slowed for the fourth quarter in a row. As problems in the eurozonerumble on, and sterling remains strong, our exporters are facing a challenging trading environment.Falling confidence means many exporters are delaying decisions to invest and take on staff,affecting the UK’s economic prospects and the move towards the ‘rebalancing’ we need to see.”
