Financial and professional firms are spearheading an economic boom in Birmingham, according to a survey published today.
It shows that the city's service sector is thriving with a high proportion reporting an increase in profitability over the past 12 months.
The success is revealed in the Birmingham Chamber of Commerce and Industry (BCI) quarterly economic survey for the second part of this year.
Forty-nine per cent of companies in the service sector, the largest in the UK outside London, report in increase in home sales compared with 38 per cent in the previous quarter. The export market is also showing an upturn with 49 per cent increasing sales, compared with 32 per cent in the first quarter of the year.
James Cooper, the BCI's policy adviser, said: "The hugely-impressive proportion of businesses reporting an increase in profitability over the past 12 months is testament to the success of Birmingham's professional and financial services sector.
"Successful businesses can play a vital role within a community - they create jobs and play an important part in generating public revenues, both through direct and indirect taxation.
"It is indisputable that business will play a key role over the coming decade in the t ask of renewing and providing employment for those areas of Birmingham that currently suffer from high levels of deprivation and unemployment.
"The proportion of service sector respondents reporting an increase in their workforce has also risen slightly. Confidence that turnover will improve over the next 12 months has remained particularly positive."
The survey, however, shows signs that the growth in UK sales may slow slightly later in the year although advance export orders are being sustained.
"Although not providing cause for alarm, these results reflect anecdotal evidence provided from Birmingham's financial and professional services sector, which suggests that several firms do not expect 2006/07 to be as successful as 2005/06," Mr Cooper said.
"The past 12 months have been regarded as particularly successful due to a relatively large number of major company mergers and acquisitions that have provided rich pick-ings for those within the sector.
"Many expect a slight slowdown due to rising inflation, the high cost of energy and the potential for a rise in interest rates later in 2006."
Inflationary pressures eased in the second quarter with fewer businesses expecting the price of services to rise in the coming three months.
But where businesses do expect a rise, pay settlements (26 per cent) and the cost of raw materials (29 per cent) have become more significant reasons since last quarter's figures.
F ifty-two per cent of respondents claim to be work-ing to full capacity, which indicates little alteration in capacity pressures compared to the first quarter of 2006.
Birmingham's manufacturing sector performed "steadily" during the second quarter of the year, the chamber survey shows.
Following a dismal 2005, domestic sales recovered slightly with 49 per cent of c ompanies showing an increased compared with 38 per cent in the previous quarter.
As the cost of energy remains high, 50 per cent of manufacturers stated that the price of raw materials was the main reason for any price increases.
A third of manufacturers said their profits fell over the past 12 months, reflecting the tough trading conditions within the UK over the past year. l Business optimism has rebounded "dramatically" from a slump because of a big increase in confidence, accord-ing to a new report today.
A survey of 200 firms by Lloyds TSB showed a huge rise in confidence between May and June as well as optimism for the rest of the year's trading.
Industrial companies were the most confident, reflecting an upturn in business for manufacturers, the study found.