Firms specialising in media and marketing are outperforming the region’s more traditional sectors – and could be at the vanguard of an upturn in 2011.
New figures from Birmingham Chamber of Commerce Group show that the service sector – which also includes retail and wholesaling, tourism, the hotel and catering trades, lawyers, accountants and cultural and creative specialists – is out-performing manufacturing with the best sales and fullest order books for more than a year.
But the survey reveals a struggling manufacturing sector, with sales and orders largely down in the UK and export markets with a slight improvement in orders from overseas.
Dr Christine Braddock, president of Birmingham Chamber, said: “This survey marks a sea-change in the economic performance of Birmingham and Solihull.
"For years the area has relied on a strong manufacturing sector but the survey confirms that there is a marked change in our economic base.”
Half of the companies responding to the survey were from the marketing and media sector, with 12 per cent from retailing and wholesale and ten per cent from tourism, hotels and catering and a further ten per cent from cultural and creative.
Dr Braddock added: “This does demonstrate how the ‘softer’ industries in the area are becoming the economic champions, a factor the chamber has recognised in its increasing support for companies involved in the media and retailing.”
Home sales in the sector were the highest for over a year with half reporting an increase and only 15 per cent reporting a drop. Advance orders also hit a 12-month high with 49 per cent recording an increase and 14 per cent a decrease.
But the labour market remains depressed with only 18 per cent increasing their workforce over the past three months and 18 per cent looking to recruit in the next quarter.
Dr Braddock said: “The great majority of labour forces have remained static and thankfully only a few have been forced into redundancies.
“It’s also indicative of hard times that most firms are not increasing investment in training or equipment.”
The only bright spot among manufacturing firms was in forward orders overseas. Sales and orders at home were down while sales overseas were largely static with 42 per cent recording an increase. Just under a quarter (24 per cent) said they had decreased.
However, 45 per cent reported an increase in export orders and Dr Braddock said: “This does show that firms are taking the advice to look for new markets and products. The Chamber has been working hard to encourage companies to look overseas in these difficult economic times and these figures demonstrate that this solution is working.”
Figures for jobs in manufacturing were the lowest for over a year with most firms recording static or smaller workforces.
Plans to invest in training and equipment were at their lowest for over a year as was confidence that turnover and profitability would improve.
“These are worrying figures for manufacturing and it is also disappointing that according to the survey only 23 per cent were working at full capacity,” she added.