Region’s business confidence edges closer to positive territory

Business confidence in the West Midlands rose 11 points during July to -7%, new figures show.

According to the latest Business Barometer from Lloyds Bank Commercial Banking, confidence in the economy rebounded 22 points month-on-month to 1%, while companies’ optimism towards their own trading prospects dipped one point to -16%.  Together, this gives a headline confidence reading of -7%.

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

When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during July. Three in five (61%) experienced a fall in demand for their products and services, up two points on the month before. Meanwhile, 14% experienced an increase in demand, down one point on June.

When asked about job retention among firms with furloughed staff, 24% expected to retain more than 90% of their staff.

A quarter (25%) of West Midlands firms surveyed said they weren’t currently using the job retention scheme.

When asked about social distancing measures, more than half (59%) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although more than a quarter (29%) said they couldn’t operate fully within the rules.

Of the 71% of businesses reporting disruption to their supply chain during July, 34% expected the situation to improve within three months, while 5% expected it would take more than 12 months to return to normal levels.

Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “This is the third consecutive month that business confidence has increased overall. And it’s encouraging to see views towards the economy edging into positive territory once again. These are signs that the region is moving in the right direction.

“However, the Barometer highlights that challenges remain. Some businesses are still struggling to operate within social distancing guidelines and demand remains weak.

“We’re committed to helping the region’s business community as it navigates the path to recovery.”