Business confidence in the West Midlands fell seven points during August to -14 per cent, a reading consistent with the UK average, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the West Midlands reported lower confidence in their own business prospects month-on-month at -22%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -14%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during August, but with the picture improving slightly month-on-month. 58% experienced a fall in demand for their products and services, down three points on the month before. Meanwhile, 14% experienced an increase in demand, on a par with on July.
Some businesses expect to make redundancies following the end of the furlough scheme in October. When asked about job retention among firms with furloughed staff, only 27% expect to bring back more than 90% of their staff.
More than a fifth (22%) of West Midlands firms surveyed said they weren’t currently using the Job Retention Scheme.
When asked about social distancing measures, more than half (58%) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although more than a fifth (21%) said they couldn’t operate fully within the rules.
Of the 59% of businesses reporting disruption to their supply chain during August 45% expected the situation to improve within six months, while 11% expected it would take more than 12 months to return to normal levels.
Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Businesses in the West Midlands have defied the national trend of easing pessimism this month. The increasing threat of a local lockdown for Birmingham is a big concern that will be weighing on firms’ overall outlook.
“However, the announcement of initiatives like The Innovation Accelerator, which aims to get more local firms involved with HS2, should help to buoy trading prospects in future months. We will remain by the side of West Midlands businesses to help them make the most of these opportunities.”
Overall UK confidence rose eight points during August to -14%. The South East became the first region to register a positive reading since March, after confidence climbed from -31% in July to 1% this month. The South West and Scotland were least confident in August at -25% and -35% respectively.
All four major industry sectors reported confidence at the highest levels since March. Manufacturing saw the sharpest increase of 14 percentage points to -7%, while construction rose 11 percentage points to -11%. The retail sector rose to -8% and services increased to -18%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “With business confidence sitting well below the long-term average, and official data for Q2 confirming the UK re-entered recession, the shape of any economic recovery remains highly uncertain. Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base, which will hopefully continue over the coming months.”