Birmingham Chamber of Commerce and Industry said yesterday it is seeing signs of a marginal recovery from the recession.
The decline in UK sales and orders has eased in all sectors in Birmingham and Solihull but export sales remain worryingly low, said BCI policy adviser William Rogers.
Also, business confidence has increased dramatically, as interest rates and inflation have fallen, the Chamber’s latest quarterly economic survey found.
Exactly half of manufacturers reported decreased UK sales in the first quarter but that improved slightly in the second quarter with 56 per cent saying sales had dropped compared with 63 per cent. However, those expecting an increase remained static at 13 per cent.
Orders also showed a slight upturn from a low first quarter with 54 per cent reporting a decrease compared with 67 per cent in the previous quarter. Fifteen per cent said they expected an increase compared with 13 per cent in the first quarter.
Manufacturing export sales were slightly down but there was an improvement from 26 per cent to 27 per cent on companies reporting an increase.
Service sector businesses showed little improvement although order books were up with 26 per cent saying they had increased advanced sales compared with 20 per cent in the first quarter. However, export figures declined further with both sales and orders down.
“Although sales remain low there are faint indications that the domestic downturn has eased. However, it is crucial for the UK economy that this improvement is sustained,” said Mr Rogers.
“The steep decline in orders at the beginning of the year means that sales must improve in the light of the appalling state of the economy at the turn of the year.
“The rate of decline has slowed in the export market but sales figures remain worryingly low.”
Chamber president Bridget Blow added: “The overall theme remains that sterling’s weakness has yet to make a significant impact on exports because the global recession has weakened demand in the UK’s key overseas markets.”
A subdued outlook continues in the labour market as conditions worsened for manufacturers in the second quarter. Nearly half (47 per cent) said their workforce had declined over the past three months.
The gap between firms reporting an increase to those indicating a decline widened to a balance of minus 36 per cent, the lowest figure for over 12 years.
However, there was a glimmer of hope with more manufacturers expecting to increase their workforce over the next three months.
In the service sector the labour force expanded by a balance of three per cent and further growth is expected in the third quarter. Nearly a quarter (24 per cent) said they expected to be recruiting, a growth of six per cent on the first quarter.
“While it’s encouraging that there has been an increase in confidence, this is only an improvement compared to last winter’s extremely gloomy picture,” said Ms Blow.
“Firms have recognised the need to develop a long-term business plan because in both sectors investment intentions for machinery and training have been revised upwards.
“However, it must be realised that the comparison is with historically low investment intentions in the first quarter.”