Kent Businesses Show Cautious Recovery Despite Rising Labour Costs

The Recovery Numbers

73% of Kent and Medway businesses cite labour costs as their top pressure point, yet domestic sales have climbed from a net balance of -12 to -2 in the first quarter of 2026. Orders followed suit, rising from -18 to -3, according to the Kent Invicta Chamber of Commerce quarterly survey.

The data captures responses from 9 February to 9 March 2026 – before the Iran conflict escalation that now threatens to push energy and fuel costs higher across the region.

Manufacturing firms outperformed their services counterparts, bucking the national trend where services typically dominate. Export performance also improved, with both sales and orders reaching -4%, suggesting Kent’s logistics hubs are finding their footing again.

Hiring Plans Surge

Nearly 50% of Kent firms plan to hire new staff despite the labour cost squeeze. Turnover expectations hit a positive 18%, signalling confidence that revenue growth can absorb higher wage bills.

But the timing matters. This optimism was recorded before geopolitical tensions escalated, potentially reshaping the economic landscape through higher energy costs and supply chain disruption.

National Context

Kent’s performance mirrors the broader British Chambers of Commerce survey of 4,560 businesses nationwide, where 91% are small and medium-sized enterprises. Nationally, 49% of firms expect turnover to improve over the next 12 months, up from 46% in the previous quarter.

However, 24% of businesses have already cut investment plans, with 56% keeping spending unchanged. Tax concerns affect 54% of firms, even as inflation worries 50% – figures that may have shifted sharply since the Iran situation developed.

Business rates remain a persistent concern for 41% of respondents, up from 34% previously.

What the Data Misses

The survey’s February-March timeframe means it captures none of the potential inflationary pressures from Middle Eastern conflict. Energy costs, already the second-biggest concern after labour, could climb sharply.

For Kent’s manufacturing sector – which showed particular strength in this survey – higher fuel costs for deliveries and energy-intensive production processes represent a significant risk to the recovery momentum.

Key Takeaways

• Domestic sales improved from -12 to -2 net balance, with orders rising from -18 to -3
• Manufacturing outperformed services sector, even as export performance reached -4%
• 73% of firms cite labour costs as main pressure, yet nearly 50% plan to hire

What This Means for Kent Residents

The hiring intentions from nearly half of local businesses could ease unemployment pressures across Medway, Canterbury, and Maidstone over the coming months. Even so, the 73% of firms struggling with labour costs may pass these expenses onto consumers through higher prices for goods and services. With the survey conducted before recent geopolitical tensions, residents should prepare for potential energy cost increases that could dampen this early recovery optimism and affect everything from local delivery charges to utility bills.

Sources

• https://www.essexchambers.co.uk/wp-content/uploads/2026/04/QES_infosheet_Q1_2026_FINAL.pdf
• https://www.cambridgenetwork.co.uk/news/quarterly-economic-survey-q1-2026-share-your-views
• https://wnychamber.co.uk/news/economic-survey-shows-decline-in-optimism/
• https://www.glasgowchamberofcommerce.com/news/news/2026/april/01/business-confidence-fragile-going-into-global-turmoil/
• https://www.britishchambers.org.uk/news/2026/03/business-confidence-fragile-going-into-global-turmoil/
• https://www.businesswest.co.uk/campaigns-policy/quarterly-economic-survey/
• https://www.mnadvisors.com/blog/post/q1-2026-construction-update