West Midlands business confidence grows in January - Lloyds Bank

Business confidence in the West Midlands rose nine points during January to 18 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the region reported higher confidence in their own business prospects month-on-month, up 12 points at 24 per cent. When taken alongside their optimism in the economy, up five points to 12 per cent this gives a headline confidence reading of 18 per cent.

West Midlands businesses identified their top target areas for growth in the next six months as evolving their product and service offering (43 per cent), diversifying into new markets (35 per cent) and investing in their team (26 per cent).

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

A net balance of 24 per cent of businesses in the region expect to increase staff levels over the next year, up 11 points on last month.

Overall UK business confidence climbed in January, with firms reporting their highest confidence levels since July last year.

Business confidence increased by five points to 22 per cent and the net balance of businesses feeling optimistic about the economy doubled on December’s reading to 16 per cent.

Ahead of National Apprenticeship Week (6-12th February) 30 per cent of businesses across the UK reported that they are looking at opportunities to grow by investing in staff development and training. A net balance of 17 per cent of firms reported plans to create new jobs in the next twelve months.

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “It’s great to see confidence among West Midlands businesses grow as we begin the new year. Its promising too that many firms are focused on investing in their teams, which will help set them up for future growth and success.

“Businesses investing in their colleagues should take advantage of the expertise and services available right on our doorstep. There is the West Midlands Apprentice Levy Transfer Fund to help companies set up apprenticeships and support is also available through the Advanced Manufacturing Training Centre which is developing critical skills for the manufacturing sector.”

For the second month in a row, confidence in the manufacturing and service sectors increased, with manufacturing rising to 28 per cent (up 15 points) and services up to 25 per cent (up seven points). Business confidence in construction was down two points to 27 per cent, while retail confidence fell for the second month in a row to seven per cent (from 13 per cent), the lowest level since February 2021.

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing.

“It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower.”