Business Confidence remains High in the West Midlands

Posted on 10 February, 2015 by Kirsten Kennedy

The upcoming General Election has cast some uncertainty over the business outlook in many areas of the country, as many companies are concerned about the repercussions of policy changes during the aftermath.

Young businessman working with spreadsheet with his colleagues on background

However, according to the latest Business Trends report by BDO, any negative effects are yet to be felt in the West Midlands with confidence amongst company executives remaining extremely buoyant.

In terms of optimism, the BDO’s Index shows a reading of 104.4 for the next six months, which although slightly lower than some of the readings taken in the aftermath of the recession remains a strong result which indicates further growth in the medium term.

This was reinforced by the Output Index’s 102.9 reading, which shows that companies in the manufacturing sector in particular are confident that their products and services will remain in demand for the next three months.

As a result of these combined indices, the BDO’s Employment Index also gave a very positive reading of 111.6. Along with being significantly higher than its long term trend, this indicates that companies will continue to divert excess funds into creating new positions and growing their workforces – especially good news for the commercial property market, as companies also seem keen to expand their premises in turn.

Head of West Midlands and partner at BDO Richard Rose praised businesses in the region for their commitment to growth.

He said; “This month’s report shows that West Midlands businesses can and will tune out of the parties’ electioneering to focus on what really matters: their business prospects.
“By discounting the political noise and taking a realistic view of the economy’s strengths, businesses are remaining cautiously optimistic.

“Businesses are worried less about the detail of which candidate will get the keys to Number Ten and more about the country’s long term economic prospects – in the meantime they are focusing on their own businesses and keeping rightly positive.”

The confidence shown in the manufacturing sector in the BDO indices was echoed in the latest report from Lloyds Bank Commercial Banking concerning the West Midlands Purchasing Managers’ Index (PMI). It showed that business activity in the manufacturing and services sectors in the region rose to a 3 month high during January, with the reading of 58.9 comfortably above the 55.7 taken in December.

In part, this growth was due to lower oil prices and low inflation combined by an increased willingness to spend on the part of consumers. However, West Midlands’ area director for SME banking at Lloyds Bank Commercial Banking, Mark Cadwallader, believes the 25th month of consecutive employment growth in the region also played a role.

He says; “Output in the West Midlands strengthened at the start of 2015, as firms were buoyed by a faster rise in new business intakes amid a strong demand environment.

“Encouragingly, companies increased employment at one of the sharpest rates in PMI survey history, underscoring optimism in the sustainability of the upturn.”

Do you think the General Election could have an impact upon business confidence in three months’ time, or will business leaders feel confident enough in the stability of the economic recovery to maintain current levels of optimism?

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