Business confidence in the West Midlands has increased for the fourth consecutive month, rising ten points during May to 41%, 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 six points at 37%. When taken alongside their optimism in the economy, up 16 points to 46%, this gives a headline confidence reading of 41%.
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 24% of businesses in the region expect to increase staff levels over the next year, up 12 points on last month.
Overall UK business confidence rose four points in May to 33%, a fourth consecutive month of growth. The reading comes after non-essential retail and hospitality firms reopened their doors to customers. Businesses reported an increase in optimism about their own trading prospects, up two points month-on-month to 28%, and their confidence in the economy grew by six points to 38%.
Firms’ hiring intentions also rebounded to pre-pandemic levels with 14% of UK businesses expecting to make new hires in the next 12 months, the highest reading since February 2020.
All UK regions reported a net positive confidence reading in May, with almost all areas recording an increase in confidence. Yorkshire and the Humber was the most positive region (up 12 points to 44%) followed by the South West (up 12 points to 42%) and the West Midlands (up 10 points to 41%). Wales reported the biggest month-on-month increase (up 18 points to 27%). Three regions reported small dips in confidence but remained in positive territory: London (down eight points to 24%), the North East (down 11 points to 26%) and North West (down five points to 38%).
Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Confidence has been gradually rising among West Midlands businesses for the past few months and it’s promising to see it reach levels not seen in the region for more than two years. We hope this positive trajectory will continue in the months ahead as the final set of Covid-19 restrictions are lifted.
“However, we know many firms are still unable to operate at full capacity at present, so we will continue to support them through the ongoing measures and beyond as we play our part in Britain’s recovery.”
From a sector perspective, manufacturing reported the sharpest increase in business confidence (up thirteen points to 53%). Construction confidence was up seven points to 35%, and retail gained five points to a four-year high of 44% with the easing of lockdown measures leading to hopes of stronger business conditions. Wider services confidence posted a more modest rise of one point to 26%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “A fourth consecutive monthly increase in business confidence, and the highest in three years, leaves us hopeful for the UK’s economic recovery. The increase in confidence was buoyed by a further easing of lockdown restrictions and a rise in optimism about the wider economy. While we need to wait and see how the months ahead will unfold, the recent rise in positive outlook is an encouraging sign that firms are emerging from the COVID-19 crisis with renewed resilience and vigour.”