OK, so smiling might be a bit of an exaggeration, but West Midlands businesses are the least pessimistic in UK, according to Lloyds Bank’s Business Barometer.
Business confidence in the West Midlands rose five points during June to -18%, making the region the least pessimistic in the UK, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
West Midlands businesses’ optimism towards their business prospects was unchanged month-on-month at -15%. With firms’ confidence in the economy growing 11 points on May, this gives a headline confidence reading of -18%.
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 of coronavirus on their business, a third said they expect to be operating at more than 50% of capacity by the end of June, while 10% didn’t expect to be operating at all by the same point. One-fifth (20%) said it would take up to six months until they were back to operating at pre-COVID-19 levels, although 7% expect it to take more than 12 months.
The majority of firms continued to see demand negatively affected during June, but with the picture improving month-on-month. 59% experienced a fall in demand for their products and services, up 13 points on May. Meanwhile, 15% experienced an increase in demand, up 11 points on the month before.
Of the 72% of businesses reporting disruption to their supply chain during May, 21% expected the situation to improve within three months, while only 3% 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: “There are promising signs that optimism in the West Midlands is beginning to improve, with business confidence rising for the second month in a row – albeit from historic lows.
“The reopening of the retail sector has provided a boost through the supply chain, and the expected restart of the hospitality industry will be another important step towards recovery. We’re ready to support businesses across the West Midlands as they plan ahead for the future.”
Across the UK, business confidence grew marginally month-on-month, rising three points to -30%. The West Midlands was the least pessimistic region at -18%, followed jointly by Yorkshire & the Humber and the North East at -23%. Scotland was the most pessimistic, with confidence dropping eight points month-on-month to -41%.
In June, the construction sector rebounded strongly, increasing 30 percentage points to -14%. The retail sector increased two points to -23% and manufacturing saw an improvement at -35%. These were the highest levels seen since March, however, other services fell to -36% largely reflecting the impact on the hospitality and education sectors.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “While the results suggest the economy may be starting to see some improvement, trading conditions remain difficult for most firms as the majority are still experiencing disruption to supply chains. Hopefully the recent Government announcement of further relaxation of restrictions and the slight easing of social distancing measures will enable more businesses to reach their capacity and resume their usual activities, which we would expect to be reflected in further improvements to optimism next month.”