Greater Manchester Chamber of Commerce has released the findings of its Quarterly Economic Survey (QES) for Q3 2025, revealing a weakening economic environment with significant sectoral variations across the region. The survey, a crucial barometer of business sentiment and economic health, presents a challenging outlook amid declining domestic demand and persistent inflationary pressures.
At an economic update event jointly held by the Chamber and The Growth Company, Subrahmaniam Krishnan-Harihara, Deputy Director of Research at the Chamber, provided an overview of the latest QES results. He explained that the findings collectively present a somewhat challenging economic environment, with two critical issues emerging: a slowdown in the economy since the previous quarter and significant variations in performance across different sectors.
The GM Index for Q3 2025 stands at 13.3, representing a decline of approximately 9 points from the end of 2024 and 2.7 points down from the previous quarter. This regional trend mirrors national data, which shows the UK economy grew by just 0.3% in Q2 2025, followed by concerning monthly fluctuations with the economy shrinking by 0.1% in July before growing by 0.1% in August. Inflation remains stubbornly high at 3.8% in both August and September, while PMI indices for September indicate broader economic weakness. Services is flatlining around the critical 50 points threshold while manufacturing and construction both remain below the threshold at 46.2.
Domestic demand has declined overall, with sectoral analysis revealing volatility across manufacturing, construction and services. The services sector experienced a notable downturn, with domestic sales balances falling from the mid-20s in the previous quarter to close to 10 in Q3. Manufacturing continues to struggle, remaining below zero for the second consecutive quarter, indicating that substantially more businesses reported declines than improvements. Construction has also decreased for two consecutive quarters.
International trade presents a mixed picture, with a dramatic turnaround in manufacturing exports contrasting sharply with declining service sector performance. Manufacturing export sales improved significantly from a balance of around -40 in Q2 to +30 in Q3, while export orders jumped from approximately -60 to +6. However, service exports declined, effectively undoing the gains made towards the end of 2024.
Sub-regional analysis reveals that GM Central, which encompasses Manchester city and where services are concentrated, showed quarterly reductions in both domestic and export sales. Conversely, GM North, comprising Wigan, Bolton, Bury, Oldham and Rochdale with their stronger manufacturing bases, demonstrated improvement in export sales, reflecting the broader sectoral trends.
The labour market shows relative stability in recruitment activity compared to the previous quarter, though levels have weakened since 2024. As recruitment has moderated, businesses are reporting fewer difficulties in finding suitable candidates. However, with muted demand reflected in stable capacity utilisation, business investment has failed to pick up and has actually shown quarterly weakening.
Subrahmaniam said: "Business confidence has taken a significant hit. While turnover confidence shows slight improvements in manufacturing, services and construction have both experienced reductions. More concerning is the confidence in maintaining profit margins, where all sectors show weakness. Manufacturing improved from -30 to -5 but remains below zero, construction output declined along with services.
"Inflation remains the primary concern amongst businesses. The combination of wage inflation, increased National Insurance contributions, and rising costs across utilities, fuel and raw materials continues to squeeze margins. Many businesses, particularly in hospitality, report reasonable footfall but declining average customer spend, forcing them to cut costs wherever possible.
"The situation is compounded by policy uncertainty. There is palpable anxiety about potential tax increases and their impact on investor confidence. In summary, there are no easy solutions, and without a credible growth plan, the economy faces continued stagnation."
The presentation of the Quarterly Economic Survey results underscores the urgent need for policy interventions that support business confidence, reduce regulatory burdens and create conditions for sustainable economic growth across Greater Manchester and the rest of the UK.