More than half of businesses in the Greater Birmingham area are confident that their fortunes are going to improve in 2012 – although inflation remains a major concern for business – according to a new report.
And the latest survey by the Birmingham Chamber of Commerce Group (BCCG) on behalf of the Greater Birmingham and Solihull LEP, found that manufacturing is offering a glimmer of hope for the sector in the new year.
Thirty-six per cent had increased their workforce in the final quarter of 2011 while 27 per cent, the highest figure for six months, expected to take on more staff in the next three months.
However, recruitment figures for the service sector continued a downward trend. Only 17 per cent had increased their workforce in the final three months of the year while 21 per cent expected it to increase in the first quarter of 2012.
Generally, there is little optimism among manufacturers that their prospects are going to improve significantly although businesses in the Greater Birmingham area were praised for their “resilient performance” in tough economic conditions by Andy Street, chair of the LEP.
The survey shows that although 56 per cent of firms were confident turnover would improve next year, it was the lowest figure since December 2010. There was a slight improvement among businesses who thought their profitability would get better with 54 per cent expecting an increase compared with 51 per cent a year ago.
The survey revealed that inflation was the biggest concern among the region’s manufacturers.
Twenty-three per cent cited it as the major external factor putting pressure on their business.
This has been the case since the final quarter of 2010 when competition was named as the biggest concern. Competition and exchange rates now rank the second highest worry, both at 18 per cent. Investment intentions in the manufacturing sector are also down. Only 22 per cent have revised their plans upwards – the lowest figure in 2011 – for investment in plant equipment and the number intending to raise their investment in training slid to 17 per cent, the lowest figure for over a year.
Fortunes in the service sector were slightly better with business confidence remaining buoyant given the current economic conditions. However, the number expecting to increase turnover in the next 12 months fell to the lowest figure for the year at 60 per cent.
The number of firms confident that profitability would improve also fell to a year-long low at 59 per cent.
Investment plans also remained static and low, reflecting expectations among manufacturers. Twenty-two per cent had revised upwards their plans to invest in equipment while only 20 per cent expected to increase their spending on training.
Inflation was cited as the biggest external concern and was putting pressure on the service sector to raise prices.
Mr Street said: “Given the amount of external bad news over recent months, our latest survey shows a resilient performance from businesses in the Greater Birmingham area.
“On balance, the expectations for profitability and investment are encouraging for 2012.
“The responses underline the fact that even in a tough market, the most progressive companies will win through.”
Michael Ward, president of Birmingham Chamber of Commerce, said: “The uncertain state of the economy reflects the mood among most companies and it is now incumbent on the Government to get behind businesses.
“A reduction in red tape would certainly help business confidence, especially on the jobs front.
“An enormous amount of paperwork is involved in employing a single person and the abolition of the default retirement age will make life difficult for young job-seekers.
“If businesses are reluctant to invest in themselves this sends a key message to the government and action to increase confidence is needed urgently.”
