Businesses in Coventry and Warwickshire have started 2024 in a much more confident mood compared to a year ago.
According to the latest Quarterly Economic Survey (QES) by the Coventry and Warwickshire Chamber of Commerce, the economic outlook for the region had dipped compared to three months ago based on a range of measures.
However, there are signs that confidence has improved coming into 2024 among firms in both the services and manufacturing sectors.
The survey, which is delivered in partnership with Prime Accountants Group, is analysed by the Economy & Skills Group at Warwickshire County Council. From the responses of businesses across the services and manufacturing sector, it gives scores out of 100 where anything above 50 is positive and below is negative.
Business confidence in the service sector has gone up from a score of 61.3 to 61.8 compared to the third quarter of 2023 and in manufacturing it has risen to 83.3, up from 72.5.
In manufacturing, domestic and international sales had both fallen in the final quarter of the year. In the service sector, sales rose domestically but fell overseas.
Investment and cashflow fell below the 50 mark in both manufacturing and services and the employment outlook also dropped but, crucially, remained above the score of 50.
Overall, it led to an economic outlook score of 55.2 which is down from 62.3 three months before, but the fact that it remains above 50 means that growth is still anticipated in the regional economy for the coming year.
Sean Rose, head of policy at the Coventry and Warwickshire Chamber of Commerce, said: “The latest QES shows the real uncertainty that there is within the economy and, yet, there is a sense of confidence that has emerged from companies across our region.
“Uncertainty is something firms have had to face for many years now and there is no doubt that it has held back growth but businesses in Coventry and Warwickshire have proved themselves to be extremely resilient.
“There is still a huge amount of pressure on firms – whether that’s the labour market or high costs – and firms will be looking for further announcements in the Chancellor’s Budget to help ease those.
“But the drop in inflation towards the end of 2023 and, therefore, the prospect of interest rates starting to come down will have been a factor in companies looking ahead to 2024 with more confidence than at the start of the previous year.
“We’d urge companies to get in touch with the Chamber as we begin the New Year to make sure they are getting all of the support they need to help them not only survive, but grow.”
Steve Harcourt, president of the Chamber and director of Prime Accountants Group, said: “I have no doubt that businesses are going to have to work extremely hard once again if they are to grow in 2024.
“The survey shows that there is still some way to go before the economy is back on an even keel but, hopefully, the next 12 months will start to bring a little more certainty for companies across the patch.
“The global economic signals are improving but I don’t believe, necessarily, that this will mean a bumper year for firms in our region – but it might see confidence improve further as the year goes on.
“Of course, there is going to be a General Election over the course of the next year but that doesn’t seem to have had any impact on business confidence in the region, which is positive news.”
Todd Williams, Business Intelligence Analyst at Warwickshire County Council, said: “Quarter four at a national level improved slightly with early reductions in concerns over inflation and interest rates, while recruiting difficulties have not improved significantly.
“However, the latest QES results show the local economy maintaining optimism, desire and capacity for growth.
“The results show that the overall economic outlook index for Coventry and Warwickshire aligning with the national trend with national optimism now approaching the sentiment of local services businesses. The local manufacturing business sentiment is less conclusive, with continuing variability from one quarter to the next suggesting significant ongoing uncertainty.
“While there are local short-term concerns, especially around recruiting, price pressures and inflation, both the local manufacturing and service sectors show strong confidence that business is expected to improve over the next 12 months.”
Pictured: Steve Harcourt (left) with Corin Crane, chief executive of the Chamber
Summary of 2023 Q4 PMI:
Economic Outlook:
Overall, 55.2, down from 62.3
Service Sector 55.2, down from 56.5
Manufacturing Sector 56.0, down from 71.5
Domestic Sales:
Service Sector 58.4, up from 54.5
Manufacturing Sector 33.3, down from 72.9
Overseas Sales:
Service Sector 50.0, down from 55.7
Manufacturing Sector 58.3, down from 70.5.
Employment
Service Sector 56.3, down from 58.2
Manufacturing Sector 58.3, down from 73.0
Investment & Cashflow
Service Sector 47.1, down from 52.2
Manufacturing Sector 38.9, down from 69.0
Business Confidence
Service Sector 61.8, up from 61.3
Manufacturing Sector 83.3, up from 72.5