West Midlands business confidence returns to net positive territory

Coventry skyline

Business confidence in the West Midlands rose seven points during February to three per cent, 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 four points at 10 per cent.  When taken alongside their views of the economy, up ten points to -3 per cent, this gives a headline confidence reading of three per cent.

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 eight per cent of businesses in the region expect to reduce staff levels over the next year, down six points on last month.

Across the UK, overall business confidence rose in February as the government announced it would be creating a ‘roadmap’ out of lockdown. Confidence increased by nine points to two per cent, the first net positive reading since March 2020. Firms’ economic optimism also jumped 12 points month-on-month to two per cent.

All UK nations and regions saw a month-on-month increase in confidence in February, with the biggest increases in the North West, the East Midlands, Wales and Scotland. Despite this, four remained in net negative territory with Wales (-5%), the South West (-6%), the East of England (-8%), and Scotland (-17%) all in the red.

Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said:“Lockdown is still causing challenges for many firms, but confidence seems to be increasing as the roadmap out of lockdown becomes clearer and the vaccine rollout continues to gather pace.

“We will remain by the side of firms across the West Midlands as they look to recover and grow in the months and years ahead.”

Confidence increased across all four broad industry sectors to the highest levels since March 2020. After a soft start to the year, manufacturing jumped by fourteen points to 5%, while construction rose eight points to 7%. Confidence in retail extended nine points to 3%, while services advanced by ten points to 1%, led by broad-based improvements in the subsectors.

Hann-Ju Ho, Senior Economist for Lloyds Bank Commercial Banking, said: “The uplift in business confidence and its entry into positive territory after nearly a year suggests that firms are cautiously pinning their hopes on economic revival in the future and the continued success of the vaccine rollout. In the coming weeks, announcements in the Budget and prospects of an easing of lockdown restrictions will hopefully help to bolster the recovery in business confidence as the economy starts to reopen.”