There was a surge in the volume of trade documentation issued in the second quarter of 2016 - before the EU referendum - the latest Quarterly International Trade Outlook (QITO) from the BCC and DHL has shown.
The report’s Trade Confidence Index, measuring the volume of trade documentation issued by accredited Chambers of Commerce, rose by 9.4% on Q1 2016 to stand at a record high of 126.95 in Q2 2016 – a rise of 4.83% on Q2 2015.
The rise in documentation could be down to short-term factors, such as a rush to get longstanding orders through before the EU referendum or before the summer season, which is traditionally a slower period.
However, despite the growth in the volume of trade documents issued before the EU referendum, many firms have not translated this into increased orders. Export sales and orders have remained in a holding pattern for the past few quarters, with firms putting off their plans for growth or recruitment until they have more certainty about the evolving economic and business position.
In order to boost confidence for firms, the BCC calls on the government to deliver on the many infrastructure projects that will help businesses get services and goods to market.
The key findings from the report are:
· The Trade Confidence Index, a measure of the volume of trade documentation issued nationally, rose by 9.4% on Q1 2016, and by 4.83% on Q2 2015. The index now stands at 126.95 – the largest index figure since records began in 2004.
· The balance of manufacturers reporting improved export sales rose to +9% in Q2 from +8% in Q1. The balance of service firms reporting improved export sales fell to +11% in Q2 from +13% in Q1.
· The balance of manufacturers reporting improved export advance orders in Q2 fell from +8% in Q1 to +5%. The balance of service firms reporting improved export advance orders in Q2 fell from +16% in Q1 to +13%.
· The balance of manufacturers expecting profitability to increase over the next 12 months fell to +28% in Q2 from +32% in Q1. The balance of service firms expecting profitability to increase over the next 12 months fell to +33% in Q2 from +36% in Q1.
Dr Adam Marshall, Acting Director General of the British Chambers of Commerce, said:
“It's encouraging to see that more UK businesses sought export documents to get their goods safely to overseas customers this Spring. However, this rise could be due to short-term factors, including a push to get deals done before the EU referendum or before the summer season, which is traditionally a slower period.
“We will be keeping a close eye on export trends in the coming quarters, to see if exporters are able to take advantage of the post-referendum fall in sterling over the summer and beyond. The cheap pound could prove to be a double-edged sword for some companies, though, as any who are also importers will have seen their costs rise significantly.
“I am inspired by the many UK firms who are looking past post-referendum uncertainty and planning for new sales and higher profits. Yet there are also many who need a confidence boost. Ministers could help by radically enhancing trade missions, and delivering the many infrastructure projects that will help UK firms get services and goods to market."
Phil Couchman, CEO, DHL Express UK, said:
“UK exporters should do all that they can to make the most of the situation in which the UK finds itself. British products remain an internationally recognised hallmark of quality and, with the fall in the value of the pound, British exporters should seize this opportunity to sell their goods more competitively overseas.
It is important that we all work together to champion solutions that will ensure cross border trade continues to be as smooth as possible, and that trade barriers do not have the opportunity to materialise.”