Experts are predicting accountants, legal firms and property management companies are among the best placed to benefit from an economic recovery.
Firms in the business services sector, which also includes computer technology and advertising, as well as engineering and telecommunications companies in the West Midlands are also likely front runners after the recession ends, according to new research.
Researchers for professional services firm PricewaterhouseCoopers’ (PwC) up-turn index said metal products, textiles and food manufacturing companies will be last to benefit from future improvements in economic activity.
The research covers 15 major sectors and uses ten economic and financial indicators, covering historical performance, market cyclicality and future growth potential.
Mark Smith, regional chairman at PwC in the Midlands, said: “It is still unclear when the recovery will begin to take hold in the UK but as the UK emerges from the global economic downturn, some industries will fare better and recover sooner than others.
“The Midlands is poised to fare well from the eventual up-turn, with a strong track record in business services and engineering.
“There is much to gain for well-run businesses in these sectors and others, as long as they stay focused on managing costs in the short-term and retain a long-term strategic vision.”
According to PwC, the cyclical nature and long-term growth of the business services sector in the West Midlands puts it in a strong position for accelerated long-term growth when the economic recovery begins.
The sector has the highest price earnings ratio – the price of a share relative to the annual income – out of the 15 sectors analysed, suggesting that investors are relatively confident.
Engineering will be the next sector to emerge during economic recovery, according to the PwC up-turn index. While the automotive industry has seen falling revenues in the last year – Land Rover sales are more than 40 per cent down so far in 2009 and Jaguar sales are 12.85 per cent down – the sector is likely to maintain a high proportion of its current capacity, it said.
Researchers say the engineering sector’s reliance on the export market could provide significant strength in the medium turn, with the weak pound and stronger demand overseas.
John Lamb, press and PR manager for Birmingham Chamber of Commerce, said: “The service sector, which has grown strongly over recent years in Birmingham, is certainly well placed to ride the recession and show first signs of green shoots.
“It’s also extremely encourage to see engineering in second place. This is still a vital sector for the West Midlands economy and, of course, it’s important for the service sector business who rely on them for a great deal of work.”