West Midlands business confidence falls back according to report

Companies in the West Midlands reported lower confidence in their own business prospects month-on-month, down 22 points at 36 per cent. When taken alongside their optimism in the economy, down 15 points to 39 per cent, this gives a headline confidence reading of 37 per cent (vs. 56 per cent in May).

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as evolving their offering, for example by introducing new products or services (46 per cent), investing in their team, for example through training (42 per cent), and investing in sustainability (35 per cent).

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

Overall UK business confidence fell nine points in June to a net balance of 41 per cent.

However, this was consistent with levels seen during Q1 2024, before the sharp rise in May, and remained above the long-term average (28 per cent).

While businesses reported lower confidence in both their own trading prospects, down 10 points to 44 per cent, and the economy, down seven points to 39 per cent, both remained robust.  Yorkshire and the Humber (48 per cent) was the most confident UK nation or region in June, closely followed by the North East of England (47 per cent) and the East Midlands (46 per cent).

Results across the sectors were mixed in June as three of the four sectors saw a decline in trading prospects. Construction fell 16 points to 42 per cent and there were other notable decreases in retail (down 14 points to 35 per cent) and services (down 11 points to 46 per cent). Manufacturing however, bucked this trend, increasing by two points to 51 per cent.

Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: "Although confidence fell during June, it’s encouraging to see that a large proportion of businesses in the region are still actively exploring new routes to growth, including plans to invest in sustainability and offer new products and services.

“We will continue to be by the side of businesses right across the region as they continue to increase their resilience and invest for the future.”

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “These results suggest a slight drop in business confidence in June as firms’ trading outlook and economic optimism fell below levels seen in recent months. However, these results are still broadly in line with the positive readings we were seeing towards the start of the year.

“Fewer businesses indicated that their prices would increase in the next few months, which chimes with last week’s fall in inflation figures. Meanwhile, there was a mixed set of results seen across the sectors, but following last month’s increase, confidence fell in construction as well as retail and services”.