Construction and manufacturing sectors help build West Midland business confidence
BUSINESS confidence among UK companies has climbed to a record high with firms in the West Midlands some of the most committed to increasing capital spending, especially in the construction and manufacturing sectors.
The Lloyds Bank Business in Britain report claimed both sectors had seen a sharp pick-up in activity levels and profits, fuelling hopes for a strong second half to the year.
The survey’s key Business Confidence Index shows that firms are continuing to grow in confidence, driven by expectations of stronger profits, orders and sales over the next six months.
The twice yearly report, now in its 22nd year, canvasses the views of 1,500 UK businesses and tracks the overall “balance” of opinion, weighing up the percentage of firms that are positive in outlook against those that are negative.
In this latest report for the West Midlands, the confidence index has increased by four points to 54%, mainly driven by increasing profits, reflecting businesses’ renewed optimism for the UK economy.
Mark Cadwallader, Area Director, SME Banking in the Midlands, Lloyds Bank Commercial Banking, said: “This upturn in confidence is a great result for the West Midlands. We hope that it will lead to a further improvement in economic activity for the second half of 2014 to allow British businesses to grow and prosper.”
Expectations for total sales, orders and profits in the next six months – the three key indicators of business confidence – have all climbed since the previous survey.
Well over half of West Midlands businesses (63%) said that they expect their orders to increase during the second half of the year; compared to around one in 20 (4%) that anticipate a decline. The resulting 59% overall net balance represents a two point increase from January 2014.
Similarly, over three fifths of businesses (63%) stated that they think their sales will increase in the next six months, while around a tenth (11%) expect a drop, leading to a 52% overall balance.
The balance of firms anticipating greater scope for increasing prices over the next six months has increased by seven points to 30%. Firms’ hopes of raising prices may help to underpin their expectations of stronger profits over the next six months. The net balance of firms expecting rising profits was 22%.
Taken together, these forward-looking indicators suggest that the current momentum of economic growth is set to continue.
West Midlands companies also signalled they intended to boost staff numbers for the second half of 2014 suggesting the current robust pace of employment growth will continue.
