Manufacturing confidence slides says Chamber

BUSINESS confidence among manufacturers in the West Midlands has declined from its optimistic high last year, the Greater Birmingham Chambers of Commerce has said.

A shortage of critical skills is also proving a major concern to many employers, the organisation added.

The findings are presented in the chamber’s latest quarterly economic survey, which covers Q4 last year.

Amongst manufacturers, firms expecting to increase turnover in the next 12 months declined from 84% in Q3 to 58%, while businesses expecting to improve profitability declined to 51% from a peak of 70% in Q2.

Most companies in the survey were managing to maintain home and export sales although those which had increased trade in the UK market dropped to 34% compared with 44% a year ago, while 30%, compared with 46% a year ago, had increased orders.
 
On exports, 37% of manufacturers reported an increase in sales, compared with 52% 12 months ago, but order books were less full. Just 34% had increased advance orders, against 49% a year ago.

Chamber president Greg Lowson said: “The upcoming General Election in May could be a factor in the slight reduction in confidence among firms as uncertainty grows. Any incoming government can help improve business confidence by strengthening commitments to improve transport infrastructure, close the skills gap and reduce input taxation.”
 
Although reporting lower figures, the service sector was more optimistic when it came to exports, with 34% increasing sales and 28% – a slight drop on Q3 – saying their orders had improved.
 
Nevertheless, confidence was also low across the service sector with those expecting to improve turnover in the next year dropping from 70% in Q3 to 58% and those confident that profitability would improve fell to 51% from 64% in the previous quarter.
 
So far as recruitment was concerned, over half (55%) of companies responding to the survey said they were attempting to recruit. However, 74% of firms said they had experienced problems attracting the people they needed during Q4.

This is the highest figure for more than two years and the chamber said it underlined the skills shortage which was afflicting the region.

“The number of firms looking for skilled labour underlines again what a major challenge this is for the region,” added Lowson.

The chamber is helping to tackle the problem through its new Skills Hub initiative.