Job creation returns to growth for first time since March

Job creation in the West Midlands has returned to growth for the first time since March as business pessimism continues to fall.

Business confidence in the West Midlands rose eight points during September to -6%, 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 at -3%.  When taken alongside their views of the economy overall, this gives a headline confidence reading of -6%.

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 by coronavirus during September, but with the picture worsening month-on-month. Sixty-five per cent experienced a fall in demand for their products and services, up seven points on the month before.

Meanwhile, 11% experienced an increase in demand, down three points on August.

One-third (32%) of West Midlands firms surveyed said they aren’t currently using the Job Retention Scheme.

Promisingly, firms outlined plans to increase the size of their workforces for the first time since the start of the pandemic in March. A net balance of 1% of firms expect to grow their employee base in the next 12 months, compared to August, when a net balance of 9% had expected to reduce headcounts.

When asked about the impact of social distancing measures, 61% of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although 26% said they couldn’t operate fully within the rules.

Of the 42% of businesses reporting disruption to their supply chain during September, 53% expect the situation to improve within six months, while 7% expect it will take more than 12 months to return to normal levels.

Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “The introduction of local lockdown measures in Birmingham and surrounding areas, introduced mid-September, will affect demand dynamics for local firms. But so far, the new restrictions haven’t dampened expectations for business activity, which climbed steeply during September. Next month’s figures will reveal the toll that the Government’s new national restrictions have taken on firms.

“We’ll remain by the side of businesses affected by lockdown measures and will support firms as they look to overcome challenges in the weeks and months ahead.”