Regional business confidence is returning but firms in the West Midlands are still not as upbeat as their national counterparts.
The latest ICAEW/Grant Thornton UK Business Confidence Monitor found that businesses in the region are starting to feel the benefits of the burgeoning UK recovery, but still lack confidence of companies in other parts of the UK.
Confidence in the region has been on an upward trend from a low of +4.3 in Q4 2012 and now stands at +23.7, compared with the UK average of +31.7.
Sales volumes are estimated to increase by 4.1 per cent and domestic sales to rise by 3.7 per cent. If realised, these figures will support an anticipated 4.2 per cent rise in turnover growth in the next year.
Tom Madden, ICAEW regional director for Midlands, said: “There are still reasons to remain positive. Export growth in the area has remained relatively strong, with businesses reporting an increase of 3.4 per cent. They expect this to continue into the next year with growth of 3.2 per cent. This is vitally important to ensure that a trade-led recovery in the UK is supported.”
Conditions in the West Midlands labour market remain tough, with businesses this quarter reporting an increase in staffing levels by just 0.4 per cent. With unemployment remaining high, employees consequently have little wage bargaining power. As a result, businesses only expect to increase average basic salaries by 1.8 per cent this year.
Dave Munton, regional managing partner at Grant Thornton, said: “The upturn in confidence means businesses are far more optimistic about next year’s capital investment levels, which is an encouraging sign for the region’s economy. Such investment is a key requirement for a sustainable recovery. ”