Business confidence has surged in the West Midlands, says Lloyds Bank

Lloyds Bank Amanda Dorel

Business confidence in the West Midlands rose nine points during January to 39 per cent, according to the latest Business Barometer from Lloyds Bank.

Companies in the West Midlands reported higher confidence in their own business prospects month-on-month, up 11 points to 38 per cent. When taken alongside their optimism in the economy, up nine points to 42 per cent, this gives a headline confidence reading of 39 per cent.

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

A net balance of 20 per cent of businesses in the region expect to create new jobs over the next year, down 16 points on last month.

Overall UK business confidence remained steady in January, dropping just one point from December’s reading of 40 per cent to 39 per cent. Firms remained positive about their future trading prospects, despite a two-point dip month-on-month to 41 per cent, and were optimistic about the economy overall, reporting a reading of 38 per cent, up one point on December’s result. The net balance of businesses planning to create new jobs in the next twelve months decreased marginally by four points to 29 per cent.

Every UK nation and region maintained a positive overall confidence reading in January, with four reporting a higher reading than last month. Along with the West Midlands, Yorkshire and the Humber (up 13 points to 48 per cent), Scotland (up 13 points to 37 per cent) and the South West (up eight points to 37 per cent) all had stronger confidence readings month-on-month, with Yorkshire and the Humber now the most optimistic region.

Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “It’s encouraging to see businesses in the West Midlands looking ahead with more optimism, and with good reason. For one, hospitality firms are set to benefit from an increase in footfall as workers return to the office and plans to upgrade transport infrastructure in the region are beginning to progress, creating opportunities in the supply chain for many.

“We know that the coming months will not be without challenges, and we will remain by the side of business to help them prosper.”

Industry sector performance was mixed during January with confidence among manufacturers increasing by three points to 43 per cent, reaching its highest level for three months due to an easing of supply chain pressures. Retail confidence also rose (up one point to 44 per cent) while confidence among firms in IT/communications remains particularly strong at 72 per cent.

The impact of Omicron over the festive period meant the service sector extended its recent run of modest decreases in January, dropping one point to 38 per cent. Positively, hospitality has recovered some of December’s decline, rising from 6 per cent to 38 per cent.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “January’s survey shows a continued resilience with minimal fluctuation as economic optimism remains at a historically strong level.

“A larger decline in confidence was potentially prevented by the reduction in Covid infection rates from early January and the prospects of the easing of restrictions across the UK.

“However, businesses remain cautious about the pandemic and are facing into challenges from rising cost pressures although many are raising their prices in response.”