Business on rise in West Midlands according to latest Lloyds barometer

That was the main finding of the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the region reported higher confidence in their own business prospects month-on-month, up 33 points at 67 per cent.

When taken alongside their optimism in the economy, up 12 points to 45 per cent, it gives a headline confidence reading of 56 per cent, against 33 per cent in December.

West Midlands businesses identified their top target areas for growth in the next six months as evolving their offering (44%), entering new markets (43%), and investing in their team (41%).

A net balance of 31% of businesses in the region also expect to increase staff levels over the next year, up two points on last month.

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

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Such an optimistic start to 2024 is a strong indication that West Midlands businesses are primed to take advantage of new growth opportunities in the year ahead.

“The announcement of three Growth Zones across the region, which are expected to give councils £1.7bn to spend on regeneration and potentially create 60,000 new jobs, should give businesses in these areas the confidence to follow through on their plans to invest in their offerings and people.

“While we can’t predict how the year will pan out, we be there to support businesses as they position themselves to thrive throughout the year.”

Overall, UK business confidence rose nine points in January to 44 per cent – its highest level since February 2022 and its strongest start to a year since 2016.

Firms’ outlook on the overall UK economy rose ten points from 27 per cent to 37 per cent, while businesses’ optimism in their own trading prospects also climbed three points month-on-month to 51 per cent.

Companies’ hiring intentions increased marginally, with 33 per cent of firms intending to increase staff levels over the next 12 months, up four points on the month before.

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “Businesses are feeling more confident following the cautious end to 2023, with this being the strongest start to a year since January 2016. The reduction in inflation, albeit with the recent uptick, and the belief that interest rates may have peaked is likely driving the rise in confidence among firms.

“With ongoing geopolitical issues and a general election on the horizon, businesses will have factored these into their risk radars and will be working to prepare for any potential impacts on their trading prospects.

“Also, half of all companies say they’re planning to increase headcount in the coming year. Despite that and the changes to minimum wage that will come into force in April, expectations for staff pay fell back following last month’s increase”.