West Midlands business confidence dips but remains upbeat
Business confidence in the West Midlands fell 17 points during April to 31 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported lower confidence in their own business prospects month-on-month, down 23 points at 32 per cent. When taken alongside their optimism in the economy, down ten points to 30 per cent, this gives a headline confidence reading of 31 per cent.
West Midlands businesses identified their top target areas for growth in the next six months as evolving their offer (42 per cent), diversifying into new markets (42 per cent) and investing in sustainability (35 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 18 per cent of businesses in the region expect to increase staff levels over the next year, down 11 points on last month.
Overall, UK business confidence climbed one point to 33 per cent in April. Every UK nation and region reported a positive confidence reading and six out of 11 regions recorded a higher reading than last month.
London reported the highest levels of business confidence at 47% (up nine points month-on-month), followed by East Midlands (up 18 points) and North East (up three points), both at 41 per cent.
Firms' outlook on their own trading prospects remained strong at 39 per cent for the second consecutive month, and a net balance of 27 per cent of businesses are intending to increase their staff levels, up two points on March.
Ahead of the three Bank Holidays in May, firms' optimism in the overall economy increased five points to 28 per cent - the highest reading since June last year.
Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “While business confidence has taken a hit this month, there is plenty to be optimistic about.
"Not only is overall confidence still upbeat, many of the region’s hospitality, leisure and retail firms are preparing for a bumper month of bank holidays which will hopefully drive increased footfall and consumer spending.
“We will be by the side of the region’s firms to help them make the most of the opportunities that this may create and to support them with their cashflow needs during this period of higher demand.”
Business confidence in the service sector rose to 36 per cent this month, the highest since May 2022, with sentiment particularly upbeat in hospitality and financial services. While the other sectors saw slight decreases, construction remained strong at 43 per cent while manufacturing and retail remain above last year’s lowest levels.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum.
“The revival in the demand for labour, which improved for the fifth consecutive month, may account for the modest uptick in wage expectations for the next twelve months.
“While firms’ concerns on overall cost pressures have eased, there is little evidence that pricing expectations have declined which may impact wider pricing decisions for the remainder of 2023.”
