More businesses in Newport are finding it difficult to recruit the right people, according to the South Wales Chamber of Commerce’s latest Quarterly Economic Survey.

The survey, which is sponsored by Lloyds Banking Group and acts as a barometer for the strength of the Welsh economy, found that 50 per cent of businesses tried to recruit during the past three months, an increase of 7.5 percentage points on the previous quarter, but 50 per cent found they had difficulty filling vacancies.

As such, 33.3 per cent of businesses in Newport say they would like to increase their workforce over the next quarter.

The frustration over recruitment comes as there are more positive signs that the recovery from recession is continuing. More than a third of businesses (34.6 per cent) say their cashflow increased in Q2, up 6.2 percentage points on the previous quarter, while, looking ahead, 72.5 per cent say they expect turnover to increase over the next 12 months and 90.2 per cent expect profitability to either increase or remain the same.

Half of businesses based in Newport saw an increase in UK sales, down slightly from 50.9 per cent in Q1, while those who saw orders increase or remain constant decreased from 86.4 to 84.3 per cent.

There are positive signs for businesses trading internationally, with businesses reporting an increase in export sales rising from 38.1 per cent to 47.1 per cent and those reporting an increase in export orders up from 35 per cent to 47.1 per cent.

Despite these figures, there was still some caution in investment, with businesses increasing their investment in equipment down from 40.6 per cent in Q1 to 33.3 per cent in Q2, yet those increasing investment in training rose from 51.9 per cent to 58.8 per cent.

The biggest pressures on businesses remained the price of raw materials and other overheads such as fuel and utilities costs, although concerns in these areas have eased when compared with the previous quarter.

Graham Morgan, director of the South Wales Chamber of Commerce, said: “Our last survey revealed that the percentage of businesses looking to either retain or increase their existing workforce over the next three months was at a seven-year high, and this latest survey has seen a growth on this figure again.

“While it’s great to see that businesses are looking to recruit on the back of increased cashflow and profitability, through improved sales and orders at home and overseas, many of them are reporting a frustration in finding the right people to fill those vacancies, particularly in engineering, electronics and ICT.

“We’re also seeing a bit more caution in terms of investment in equipment and training, largely because businesses cannot make their investment unless they have the workforce in place to take their growth aspirations forward.

“Thankfully, we are seeing more further education institutions introducing vocational training courses for young people and, as a result, businesses are now willing to take on people at 16 or 18, rather than at 21 or 22 when they have finished their degree.

“It’s important we build on these first steps, though, and that the private sector and academia work together to ensure that our schools, colleges and universities are equipping people with the right skills so they are readily employable after finishing their education. Many businesses are telling us that they’re under capacity and ready to employ, so we must have a joined-up approach to ensure we give young people the core skills that will secure them long-term jobs.”

Nathan Bowles, chief executive officer of managed service provider, Smart Solutions, which is based in Newport, said: “We are experiencing a very busy period as the economy improves and organisations look to take on additional staff, uplift shift patterns, and look at safer, manageable solutions to expand productivity to meet demand. Indeed, many of our clients have been looking to us to support in the engagement of additional permanent and flexible staff over the last few months.

"However, while unemployment levels continue to fall, we are finding it increasingly challenging to find the right people to fill certain positions. We often hear about skills gaps in specific sectors, such as engineering, but it is becoming equally difficult to recruit in manual labour sectors, for example drivers of large goods vehicles, There simply aren't enough qualified and experience people in the marketplace to keep up with the current growth demand.

"As new skills gaps are exposed, it's important that there is a collaborative approach to recruitment and training, so that there are sufficient qualified people to meet labour requirements for all types of businesses. If these issues are not anticipated and managed, economic growth could find itself treading water.”