Business confidence in the West Midlands reaches two-year high

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Business confidence in the West Midlands rose four points during April to 31 per cent, the region’s highest reading since January 2019, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the West Midlands reported higher confidence in their own business prospects month-on-month, up seven points at 31%.  When taken alongside their optimism in the economy, down two points to 30%, this gives a headline confidence reading of 31%.

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

When it comes to jobs, a net balance of 12% of businesses in the region expect to increase staff levels over the next year, down one point on last month.

Overall UK business confidence surged 14 points in April to 29%, the highest reading since September 2018. The result follows the reopening of outdoor hospitality venues and non-essential retail and personal services providers in England and comes ahead of further restrictions easing in Wales and Scotland. Firms’ confidence in their own business prospects rose by 14 points to 26%, and their optimism in the economy increased by 15 points to 32%.

Most UK regions and nations reported a month-on-month increase in confidence during April, with firms in the South West (up 22 points to 30%), London (up 20 points to 32%), the East Midlands (up 20 points to 40%) and Yorkshire and the Humber (up 20 points to 32%) reporting the largest surges. No nation or region reported a fall in confidence, and nowhere had a net-negative confidence reading for the first time since July 2019.

Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “It’s promising to see confidence among businesses in the West Midlands continue to rise after a significant increase last month. The easing of some restrictions in April will, no doubt, have been a boost to many – particularly those in the retail and hospitality sectors.

“With the further loosening of restrictions on the horizon, it’s likely that confidence will continue to rise, but we know that businesses will face challenges as they continue to adapt and get back to business as usual. We’ll be by the side of the region’s business community in the months to come as firms build back better stronger and set their sights on growth opportunities.”

Confidence increased in all sectors, with manufacturing and retail confidence levels at three-year highs. Manufacturing stood out as the most positive sector (40%), likely reflecting strong global demand and notwithstanding ongoing supply chain issues. Meanwhile, retail confidence jumped to 39%, while construction confidence also increased to 28%. Services confidence rose to 25%, which was also the highest it has been since 2018.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “A third consecutive monthly rise in business confidence alongside the highest level of confidence for two-and-a-half years tells us a positive story about the UK’s continued economic recovery and leaves us optimistic about the road ahead. While uncertainties remain regarding the evolution of the pandemic, this month’s improvement in sentiment reflects a further easing of COVID-19 restrictions, while progress in vaccine deployment is raising hopes that the negative impact of the health crisis will continue to fall in the months ahead as the economy reopens.”