The West Midlands economy has taken a distinct turn for the worse, according to a survey by the British Chambers of Commerce conducted as the impact of MG Rover's collapse spread throughout the region.
Service activities as well as manufacturing both fell back sharply from relatively encouraging findings from the same survey in the first quarter of this year.
The gloom was relieved to some extent by measures of confidence in the future for both turnover and profitability stronger than the national average, though slightly weaker than in the BCC's last survey.
Another bright feature for West Midlands companies was cash flow which improved for both manufacturers and service activities.
Overall, though, there has been a marked worsening of the region's economic climate.
"This may be influenced by Rover a little bit too much," commented David Kern the BCC's economic adviser. He had warned earlier that the first-quarter profile of the West Midlands economy was probably freakishly rosy.
Manufacturers in the region saying their home sales are up outnumber those with a setback by only one per cent this time, down from 21 per cent in March and 18 points short of the national average.
A negative balance of two per cent reported for export orders is down 30 points from the first quarter of the year and 13 points below the national aggregate.
The region's service activities - which include retailing - have lost most of the earlier buoyancy.
Service companies with better home sales still outnumber those with a decline by 13 per cent, but that was only marginally better than the national aggregate and 27 points down on January/March.
Service export orders fell by 17 points to leave a balance of only four per cent with an increase. At the Black Country Chamber, Ian Brough, chief executive, said this was "yet more evidence that the Bank of England must act now to help companies survive this obvious downturn".
He went on: "News that West Midland companies are ahead of the national average in terms of confidence on turnover and profitability gives some cause for cheer. But even these indicators are slowing.
"This is one of the most comprehensive surveys of business confidence and performance and backs up what we in the real economy have been saying for months - interest rates must come down as a first step towards getting the economy back on track," he added.
David Frost, director general of the British Chambers, urged the committee to reduce interest rates quickly to "the lowest level consistent with the (two per cent) inflation target".
He also called on the Government to think again about its plan to cut spending on export promotion and development by £71 million a year to £160 million by 2008.
"This is not the time to cut back the funds for export support and promotion," he said.
"The decline in all the export balances, for both manufacturing and services, is very worrying.
"The Government must strengthen support for exporters. We get a bigger bang for the buck than on almost anything else."
Nationally, the survey confirmed that the malaise in manufacturing has spread to service activities, though it was not clear how much of this was due to the retail slowdown.
The balance of service companies reporting better home sales fell to 12 per cent from 23 per cent in the first quarter - lower than at any time since fourth quarter of 1998.
Mr Kern said that in the light of this the BCC may have to revise down its growth forecast for 2005 to two or 2.1 per cent from 2.4 per cent in March.
