West Midlands business confidence rises in January - new figures show

While West Midlands companies reported lower confidence in their own business prospects month-on-month, down one point at 60%, their optimism in the economy rose seven points to 43%, , according to the latest Business Barometer from Lloyds.

Taken together, this gives a headline confidence reading of 51% (vs. 48% in December 2024) – the second highest of any UK region or nation in January, after London (55%).

A net balance of 64% of businesses in the region also expect to increase staff levels over the next year, up 16 points on last month.

Looking ahead to the next six months, West Midlands businesses identified their top target areas for growth as entering new markets (41%), investing in their team, for example through training (38%) and evolving their offering by introducing new products or services (33%).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.

Nationally, UK business confidence fell two points in January to 37%. While firms’ optimism in their own trading prospects strengthened four points to 51%, their confidence in the wider economy dropped seven points to 24%.

There were similar falls in manufacturing, construction and retail this month, with a slight increase in services. Confidence fell to 38% in manufacturing (down 4 points), 36% in construction (down 5 points), and 40% in retail (down 3 points). However, confidence in services increased by 3 points to 38%. 

These results come within a general trend of larger confidence declines in retail and services in recent months. Within the services sector, confidence has notably fallen in hospitality but has remained more stable in business services and health-related services.

Dave Atkinson, regional director for the West Midlands at Lloyds, said: “It’s fantastic to see business confidence in the West Midlands rising and more planning to hire – something that won’t just benefit them, but also their local communities.

“As businesses look to capitalise on this outlook, we’ll continue to be by their side with our tailored support.” 

Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “Changes in confidence can sometimes be sudden and sharp, but what we have seen recently has been a more gradual and measured decrease over time. 

“The figures for trading prospects show promise with businesses signalling more resilience and assurance in their ability to weather perceived economic headwinds. The regional picture is similarly a cause for optimism, with seven regions reporting higher confidence, meaning it is the first time since July there has been more confidence rises than falls regionally. 

“Elsewhere, the results for hiring prospects are in line with other trends from this month’s survey – dipping slightly by one point to 32%. Price expectations have fallen too, for the third month out of four”.