WEST MIDLANDS BUSINESS CONFIDENCE DIPS IN FEBRUARY

29 Feb 2024

Published in: Member News

---

Business confidence in the West Midlands fell six points during February to 50%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

---

• Business confidence in the West Midlands fell six points to 50% in February, amid a weaker outlook in both firms’ own trading prospects (down seven points to 60%) and the economy (down three points to 42%)
• However, a net balance of 35% businesses in the region expect to increase staff levels again over the next year, up four points on last month
• Overall, UK business confidence dipped two points month-on-month (42%), although hiring intensions climb to the highest level (36%) since May 2022.

Business confidence in the West Midlands fell six points during February to 50%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the West Midlands reported lower confidence in their own business prospects month-on-month, down seven points at 60%. When taken alongside their optimism in the economy, down three points to 42%, this gives a headline confidence reading of 50% (vs. 56% in January).

However, a net balance of 35% of businesses in the region expected to increase staff levels over the next year, up four points on last month.

Looking ahead to the coming six months, West Midlands businesses identified their top target areas for growth as investing in their team (42%), evolving their offering, including introducing new products or services (38%) and introducing new technology (35%).

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

National Picture

Overall, UK business confidence dipped two points in February to 42%, driven by softening confidence from firms in both their own trading prospects (49% vs. 51% in January) and the wider economy (34% vs. 37% in January).

However, companies’ hiring intentions increased to the highest level since May 2022, with 36% of firms intending to increase staff levels over the next 12 months, up three points on the month before.

Scotland was the most confident part of the UK in February (56% vs. 42% in January), followed by the North East (54% vs. 62%) and the East Midlands (52% vs. 38%).

Sector Insights

There was a mixed picture for sectors this month. Confidence fell in manufacturing (nine points to 40%) and construction (seven points to 38%) respectively, although results remain higher than the same time last year. In contrast, the dominant services sector was unchanged compared to January at 45%, exceeding all months of 2023 except for November. Retail confidence was broadly steady, dipping one point to 41%.

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: 

“Despite a slight dip in overall confidence in February, it’s encouraging to see that West Midlands firms are still positive in their own prospects and making investments for future growth – whether that’s hiring or training new staff or reviewing their range of products and services.

“With green shoots emerging in the economy in key areas like inflation and demand, I’m hopeful that there will be many new opportunities on the horizon for businesses that are prepared. We’ll continue to be by the side of firms across the region to help them make the most of whatever arises.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said:

“This month’s data still reflects a positive mood among businesses despite a marginal fall in overall confidence. Firms appear to be upbeat about their prospects and the economy, supporting their positive staffing expectations.

Looking at the sectors, there is a mixed picture. There was a slight fall in confidence reported in the manufacturing and construction sectors, while retail and services stood their ground – remaining unchanged compared to January’s figures. But despite the manufacturing and construction fall, businesses are still showing high levels of confidence.

“The split across the regions also provides reason to view the dip in confidence at the broader UK level cautiously. Six regions have reported an increase in confidence while the other six have reported a decrease. So, scratching the surface, we see a story that continues to show a more positive outlook for the year ahead.”