West Midlands business confidence rises in May - report

Business confidence in the West Midlands climbed 15 points during May to 56 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 15 points at 58 per cent.

When taken alongside their optimism in the economy, up 14 points to 54 per cent, this gives a headline confidence reading of 56 per cent (vs. 41 per cent in April) – the second highest recorded of any UK nation or region in May, behind Scotland and the South East of England (both 57 per cent).

A net balance of 39 per cent of businesses in the region also expect to increase staff levels over the next year, up 22 points from April.

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as investing in their team, for example through training (39 per cent), introducing new technology (37 per cent), and evolving their offering (32 per cent).

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. The data for this edition was collected between 1 to 16 May, before the UK general election was announced.

In May, overall UK business confidence reached its highest level since 2015 – rising by eight points to a net balance of 50 per cent. 

Businesses showed increased optimism in both their trading prospects (up nine points month-on-month to 54 per cent) and the economy (up seven points to 46 per cent).

Firms’ trading outlook was the most optimistic in seven years, while economic optimism was the highest recorded since September 2021.

Similarly, there were particularly strong results reported in the construction and services sectors this month.

Prospects in the construction sector jumped to 58 per cent (up 20 points), the highest for 14 months, while in services, expected output increased to 57 per cent (up 12 points).

On the latter, it is the highest level since the survey was expanded in 2018. Expected business activity in the retail sector also improved to 49 per cent (up three points).

Although trading prospects in manufacturing eased slightly to 49 per cent (down three points), the underlying trend over the last three months remains positive.

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “These findings paint a picture of a region that’s looking firmly towards growth.

“Encouragingly, the steps that businesses are taking to drive their plans – from training to technology – are also those that will also help bolster their long-term resilience, putting them in a strong position to make the most of new opportunities well into future.

“Whatever firms’ plans, and whatever bright spots on their horizons, we’ll continue to be by their side to help them deliver on their ambitions.”

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “These results highlight a notable improvement in business confidence. Optimism about the economy increased to 46 per cent this month – the highest result since September 2021, when the country was emerging from the Covid-19 pandemic, but before the energy crisis after the invasion of Ukraine.

“The regional picture has also improved – we’ve now seen increases in seven of the UK’s 12 regions, where there was previously a more mixed picture. Results in the South East, Scotland and the West Midlands were particularly strong. Across the sectors, there were strong, broad-based improvements in services and construction.”