Disappointing growth in new orders has left the UK trailing behind other nations as demand for global goods begins to trend upwards, new data from Tradeshift can reveal.
According to Tradeshift’s Q1 Index of Global Trade Health, UK order volumes dropped to five points below expectation in the first quarter of 2024.
Total trade activity across the nation’s supply chains improved slightly in Q1, but growth trailed that of the Eurozone, US and China, where growth in new orders has continued to surge.
The latest transaction data from Tradeshift, used by over a million businesses worldwide, shows the UK losing ground against an improving global picture.
Total trade activity across the Tradeshift network improved by one point compared to the previous quarter, landing three points below the anticipated range in Q1. While this marks the ninth consecutive quarter of growth below expectations, it also signifies the third consecutive quarter of upward momentum after a prolonged period of sluggish activity.
Key regional and sector-based indicators from the report include:
- China turnaround: Trade activity in China rose at the most significant rate in Q1. Transaction volumes grew at two points above the expected level, the highest in more than two and a half years.
- US moves up a gear: The US also continued gaining momentum in Q1, with total trade activity tracking one point above the baseline. Order volumes surged to an impressive seven points above the expected level, following growth of a similar level in the previous quarter.
- Manufacturing recovery: Tradeshift sees growth coming in part from an uptick in demand across the manufacturing sector where trade activity tipped back into the expected range for the first time in a year.
- Eurozone edges higher: Activity levels across the Eurozone improved to three points below the baseline in Q1 having sunk as low as nine points below that level just six months earlier. New orders grew at six points above anticipated levels.
“We’re seeing successive quarters of strong order volume growth for the first time in two years with only the UK failing to reflect this pattern,” said James Stirk, CEO, Tradeshift.
“Demand levels seem to be recovering, but there’s still a fair way to go before we start to see a normalisation. Recovery is likely to remain fragile over the short-to-medium term, with factors such as the Red Sea crisis and wider geopolitical uncertainty clouding the picture.”
While a sustained recovery in orders is suggestive of more favourable trading conditions, liquidity challenges persist for suppliers, posing a potential challenge as supply chains look to ramp up activity. Although invoice payment times have decreased since their peak in Q3 2022, suppliers still face a 6% longer wait compared to the pre-pandemic era.
“Cash flow is akin to fuel in supply chains and a lot of suppliers will be running on empty after two hard years,” added Stirk. “The longer suppliers have to wait to turn invoices into cash, the greater the likelihood that an influx of new orders starts to outpace the availability of working capital to fulfil demand.”
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