West Midlands Businesses Start 2024 with Leap in Confidence

31 Jan 2024

Published in: Member News

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Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking responds.

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• Business confidence in the West Midlands rose 23 points to 56% in January.
  
• Confidence in their own trading prospects also increased significantly by 33 points to 67%
• Overall UK business confidence increased by nine points in January to 44%, with firms’ outlook on the economy up month-on-month by ten points (37% in January vs. 27% in December).

Business confidence in the West Midlands rose 23 points during January to 56%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the region reported higher confidence in their own business prospects month-on-month, up 33 points at 67%. When taken alongside their optimism in the economy, up 12 points to 45%, this gives a headline confidence reading of 56% (vs. 33% in December).

West Midlands businesses identified their top target areas for growth in the next six months as evolving their offering (44%), entering new markets (43%), and investing in their team (41%).

A net balance of 31% of businesses in the region also expect to increase staff levels over the next year, up two points on last month.

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 rose nine points in January to 44% – its highest level since February 2022 and its strongest start to a year since 2016. Firms’ outlook on the overall UK economy rose ten points from 27% to 37%, while businesses’ optimism in their own trading prospects also climbed three points month-on-month to 51%.

Companies’ hiring intentions increased marginally, with 33% of firms intending to increase staff levels over the next 12 months, up four points on the month before.

London and the North East were the joint most confident parts of the UK in January – each posting a headline confidence of 62% – followed by the West Midlands (56%) and Yorkshire & the Humber (44%).

The East of England (38% in January vs. 45% December) and Northern Ireland (29% vs. 36%) were the only two regions to reporting declining levels of confidence. The majority of the data was collected before the December ONS inflation data was announced on January 17th.

Sector Insights

Three of the four sectors tracked in the Barometer reported rises in confidence. The most significant increase was in services which accelerated 15 points to 45%, up from December’s 16 point drop. Manufacturing confidence also increased to 49%, while construction rose eight points to a 10-month high of 45%.

There was a more mixed picture in retail however, dipping three points to 41% with anecdotal evidence of weaker footfall and sales in December as shoppers hit the streets earlier than usual in November. Nevertheless, some companies still reported stronger sales over the festive period.

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

“Such an optimistic start to 2024 is a strong indication that West Midlands businesses are primed to take advantage of new growth opportunities in the year ahead.

“The announcement of three Growth Zones across the region, which are expected to give councils £1.7bn to spend on regeneration and potentially create 60,000 new jobs, should give businesses in these areas the confidence to follow through on their plans to invest in their offerings and people.

“While we can’t predict how the year will pan out, we be there to support businesses as they position themselves to thrive throughout the year.”

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

“Businesses are feeling more confident following the cautious end to 2023, with this being the strongest start to a year since January 2016. The reduction in inflation, albeit with the recent uptick, and the belief that interest rates may have peaked is likely driving the rise in confidence among firms.

“With ongoing geopolitical issues and a general election on the horizon, businesses will have factored these into their risk radars and will be working to prepare for any potential impacts on their trading prospects.

“Also, half of all companies say they’re planning to increase headcount in the coming year. Despite that and the changes to minimum wage that will come into force in April, expectations for staff pay fell back following last month’s increase”.