Business activity across the island has hit its lowest ever level according to the latest ‘health check’ of the economy, with nearly three quarters of businesses reporting a drop in turnover.
The finding came in the Business Tendency Survey published this morning by Statistics Jersey, which is based on reports from local Chief Executives and Managing Directors about how their companies are faring compared to three months earlier and their expectations for the next three months.
Nearly three quarters of local businesses said that their activity had declined, with just 10% reporting a positive change. This was accompanied by a 73% drop in turnover.
The outlook for the finance sector was described as “negative”, while all other sectors were “extremely negative.
The overall situation is more negative than March 2020, with 7 significant decreases and 1 significant increasehttp://ow.ly/MLKU50AFPXe pic.twitter.com/RdqUasGnDK— Statistics Jersey (@JsyStats) July 23, 2020
Across the board, business optimism dropped by half, as profitability dived by 70% and new business declined by 58%, while input costs went up.
Jersey’s largest industry – the finance sector – saw its business activity drop by a fifth, but this was just a fraction of the impact felt by other industries, whose activity fell 80%.
Hotels, restaurants and bars struggled the most, followed by construction then wholesale and retail.
Pictured: The cost of running a business has increased throughout the pandemic.
Feelings about the future were mixed.
Around two in five businesses expected to see their activity drop over the next three months, while just under a third thought their activity would increase.
Breaking down these confidence levels, Statistics Jersey reported: “A similar proportion of both the finance and non-finance sectors predicted a decrease in activity (44% and 43%), but a larger proportion of non-finance companies (37%) predicted an increase compared to finance companies (12%).
“The future business activity indicator was extremely negative for hotels, restaurants and bars (-62 pp), strongly negative for construction (-34 pp), positive for wholesale and retail (+16 pp), and negative for other non-finance (-10 pp).”
Pictured: The outlook for hospitality was negative.
Predictions for future employment were branded “strongly negative” for hotels, restaurants and bars, as well as construction, wholesale and retail.
Speaking following the release of the survey, Economic Development Minister Senator Lyndon Farnham commented:
“The covid-19 outbreak has had a significant impact on our Island’s economy. Early in the pandemic, as the Government of Jersey anticipated the challenges this health emergency would have on Jersey’s businesses, it launched the largest and most comprehensive package of business support ever seen in the Island. The aims of these measures were to support our economy and keep people in jobs.
“Most notably, the Payroll Co-Funding Scheme, which has, to date, paid out more than £50 million to protect livelihoods, has helped to keep more than 15,000 people in employment. The Business Tendency Survey shows that although 72% of firms experienced a reduction in activity, significantly fewer businesses (40%) reduced the number of their employees. The Government has also supported the economy through deferring Social Security and GST payments for the first half of the year, setting up the Business Loan Disruption Guarantee Scheme and also launching the Covid-related Emergency Support Scheme."
Pictured: Economic Development Minister said the government has paid out more than £50m to protect livelihoods.
“Data on the use of these schemes and other indicators such as the numbers of Islanders Actively Seeking Work, suggests we have been successful in reducing the impact of the pandemic on the economy. However, it is vital that we build on the work already undertaken and will do this through our £150 million Fiscal Stimulus Package, which includes giving direct payments to low-income households, giving every islander £100 to spend in the local economy and abolishing the Prior Year Basis payment of tax. We will also soon be setting out the future of the Payroll Co-Funding Scheme, to ensure that jobs and businesses continue to be protected throughout the winter and in to next year.”
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