West Midlands business confidence soars to joint highest in UK - report

Business confidence in the West Midlands rose 17 points during September to 59 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 32 points at 65 per cent. When taken alongside their optimism in the economy, rising two points to 53 per cent, this gives a headline confidence reading of 59 per cent (vs. 42 per cent in August).

A net balance of 54 per cent of businesses in the region also expect to increase staff levels over the next year, up 19 points on last month.

Looking ahead to the next six months, businesses in the West Midlands identified their top target areas for growth as investing in their team, for example by investing in training (52 per cent), entering new markets (39 per cent) and evolving their offering, including through introducing new products or services (38 per cent).

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

Overall UK business confidence in September dipped slightly, to 47 per cent down from August’s 50 per cent.

Though there was a marginal increase in their own trading prospects (up two points month-on-month to 54 per cent), firms’ confidence in the overall economy dropped nine points to 38 per cent. 

The joint-most confident regions in the UK were the West Midlands and London, both reporting overall confidence of 59 per cent. Only Northern Ireland, Wales, London, the South West and North West reported an increase in overall confidence.

 Projections for output were mixed across the sectors, with some showing significant changes from previous results. In construction, the sharp increase last month was largely counteracted by a drop in expectations in September, falling by 12 points to 46 per cent.

Similarly, in manufacturing, trading prospects fell for a second month to 53 per cent, although this figure is still stronger than the year-on-year figure. However, the falls in manufacturing and construction sectors were more than offset by a small rise in retail and a bigger rise in the dominant service sector.

Dave Atkinson (pictured), regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “A strong leap in firms’ confidence in their own trading prospects means the West Midlands is now boasting the joint highest rating out of all UK regions.

“It’s therefore more important than ever that we remain by the side of West Midlands businesses, who can draw on our support to unlock the working capital they need to take leaps to execute their growth plans and keep this momentum going.

“A strong focus on increasing staff levels is also likely to ripple outwards, benefitting the local communities that they operate in.”

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Although overall confidence fell this month, that fall was from a nine-year high and businesses remain positive about their own trading prospects. The joint-highest result this year could suggest that respondents still see a positive future for their own companies, which is also reflected in the largely unchanged employment figures.

“The more mixed picture for economic optimism points to some businesses maintaining a degree of caution. While we still expect economic expansion, it may occur at a slower rate than the first half of 2024.”