Signs of optimism returning to West Midlands manufacturing have been given a cautious welcome by the region's largest business membership organisation.
Results from the thirdquarter survey by the Confederation of West Midlands Chambers of Commerce show a significant increase in the number of companies working to capacity as exports recovered well supported by a rise in UK sales.
This is in contrast to the national picture, which shows a slump in manufacturing with confidence falling, prompting calls for a further cut in interest rates.
David Burton, the confederation chairman, said: "Our latest survey suggests the West Midlands has bucked the national trend - the region's manufacturers are making a fight of it in tough times.
"This is welcome, but it would be unwise to draw any firm conclusions from one quarter's results. If you look back over the past five quarters, it has been a fairly static picture in most of the sampled areas, in manufacturing and in the service sector.
"We shall have to wait to see if this is a recovery, however small, or just a blip."
The Confederation survey, which includes results from Birmingham & Solihull, the Black Country, Coventry & Warwickshire, Herefordshire & Worcestershire, Shropshire and Staffordshire Chambers, shows 41 per cent of manufacturers working to capacity. This compares to 29 per cent for the previous quarter.
Exports for the quarter rose significantly, with a percentage balance of plus 14 per cent of companies reporting an increase in sales, compared to those reporting a decrease. This compares to a zero balance last quarter. Forward orders rose, but modestly.
The percentage balance for manufacturers seeing improved UK sales rose from minus six per cent to plus five per cent, while forward orders remained static.
The survey, the largest of its kind in the region, revealed a small increase in the number of businesses taking on new employees and also in those intending to recruit, although nearly half continue to find recruitment difficult, particularly if they are looking for skilled workers or managers.
Business confidence that turnover will improve rose from a balance of plus 15 per cent in quarter one and plus 23 per cent in quarter two to plus 34 per cent in quarter three.
A balance of plus 31 per cent of businesses also believe profits will improve in the next three months. This is significantly higher than the previous quarter's figure of plus 12 per cent.
On external factors affecting business, competition (24 per cent) and inflation (14 per cent) were the areas of greatest concern.
A balance of plus-25 per cent of manufacturers expect their prices to rise in the current quarter, compared to last quarter's plus-16 per cent, while on costs the prices paid for raw materials was the major worry for 46 per cent of companies. Investment intentions rose slightly.
In the service sector, UK sales nudged upwards from plus-17 per cent to plus-19 per cent, although this compares to plus-35 per cent in the first quarter. There was a similar pattern for forward orders.
Export sales increased slightly but from a poor position, while forward orders were stagnant.
The labour market within the sector was relatively static, both in recruitment in the past three months and among companies looking to recruit in the next three.
Of those attempting to recruit, 51 per cent reported difficulties.
Confidence of improved turnover rose to plus-57 per cent, compared with the previous two quarters' plus-56 per cent and plus-54 per cent.