The extent to which the West Midlands' growing and confident service economy is offsetting the malaise in much of the region's manufacturing is charted in the latest quarterly survey from the British Chambers of Commerce.

"The contrast between manufacturing and services is much greater in the West Midlands than nationally," said David Frost, the BCC's director general.

Overall, the findings for the region's industry are disappointing. Sales and orders have worsened since the BCC's last survey and all are below the national averages.

More job losses are on the way, too, though fewer than in the final months of 2005. West Midlands manufacturers saying they will cut jobs in the coming months outnumber those intending to recruit by three per cent of the sample - but that is half the adverse balance three months ago.

In terms of confidence a positive balance of 28 per cent looking for higher profits is in line with the national average and a little better than in the last survey.

But when it comes to turnover the balance of those expecting an increase has fallen back to 18 per cent from 38 per cent and is notably short of the 43 per cent recorded across the UK.

"There may be more busy fools in other parts of the country," was one explanation.

Confidence among West Midlands service companies is much more marked. Over-whelming positive balances of 49 per cent and 40 per cent expect higher turnover and profits in the coming months.

In both cases that is slightly fewer than three months ago - but ahead of the national average, particularly in terms of profitability.

Over the country as a whole the BCC concluded that the economy remains weak and that growth is likely to remain below trend despite a small improvement in the final three months of last year.

"We would like to see a small cut in interest rates as soon as possible," said David Kern, the BCC's economic adviser.

In a survey covering 5,000 companies, the BCC found that manufacturing has persistently failed to sustain its recovery and faces acute threats, despite a pick-up in the fourth quarter of 2005.

The BCC reached a similar verdict on the service economy. "The service sector's fourth-quarter improvement was from a low base, and its prospects are mediocre," it stated, noting that a small improvement in the final months of 2005 follows a marked deterioration in previous quarters.

"Worsening trends seen earlier in 2005 may be stabil-ising," the BCC added. "But weak balances across both sectors signal acute risks. Any UK recovery in 2006 is likely to be weak and below-trend." ..SUPL: