A booming service sector in Birmingham is in marked contrast to the fortunes of the city's manufacturers, accord-ing to new research.
While manufacturers have been forced to become leaner in an attempt to fight tough trading conditions both at home and abroad, the service sector looks on course to deliver the 50,000 new jobs predicted for Birmingham and Solihull in the next decade, continuing the on-going transformation of the local economy.
According to the first quarterly economic survey of 2006 undertaken by Birmingham Chamber of Commerce and Industry, manufacturers are laying off employees and fewer staff are being recruited.
But improved efficiency appears to be maintaining production levels as recruitment activity slumps to a new low since records began in 1995.
BCI policy adviser James Cooper said today: "The manufacturing sector is continuing to lay off employees and fewer staff are being recruited than at any time in at least 11 years.
"The amount of capacity in the economy has fallen to a record low, which could have sparked the drive to find the higher levels of productivity that manufacturers have for so long been called on to deliver."
A percentage balance of +46 per cent of respondents now state that the price of goods is likely to rise over the next three months - something sure to worry the Bank of England Monetary Policy Committee which takes its latest interest rate decision on Thursday.
It is expected to leave rates unchanged while it sees how price pressures develop, again thwarting manufacturers' hopes for a cut.
"With more citing the cost of raw materials over any other reason as the source of pressure to increase prices, manufacturers have no choice but to pass on increasing costs to their customers," said Mr Cooper.
While the domestic market remained relatively neutral for manufacturers, the international market has worsened dramatically with sales and forward orders falling back from record results in the previous quarter.
Only 32 per cent reported increased exports sales compared with 49 per cent in the last quarter of 2005 and improvements in forward orders were down from 44 per cent to 25 per cent.
Mr Cooper said: "On the plus side, investment plans appear to be holding and Birmingham's manufacturers remain stoically confident that profits and turnover will improve over the next three months but most are bracing themselves for even fiercer competition, especially from China and India."
There is a contrasting picture from the city's service sector, which is optimistic after a slight wobble in the final quarter of 2005.
The balance of those expecting profitability to increase over then next three months has rocketed to +83 per cent and the number of companies expecting to increase their workforce in the next three months has risen to +43 per cent. Both figures are the highest for 11 years.