Businesses in Coventry and Warwickshire emerged from the first three months of the year feeling more confident than at any point over the past 12 months, according a new survey.
However, the Coventry and Warwickshire Chamber of Commerce’s first Quarterly Economic Survey of 2021 showed that there are still many concerns around the economic recovery after the Covid-19 crisis hit firms hard across the region.
The survey, which is delivered in partnership with Prime Accountants Group, is analysed by the Economy & Skills Group at Warwickshire County Council. Its analysis uses a similar score to the national Markits Purchasing Managers Index (PMI) where 50 is the balance and anything above means the majority feel positive and anything below means the reverse.
It also feeds into the British Chambers of Commerce’s national research and provides a barometer for business sentiment.
Of those firms surveyed in Coventry and Warwickshire, service sector confidence jumped to 80.1 compared to 67.9 at the end of 2020, while the manufacturing sector moved up to 71.1 from 71.0.
But there were mixed responses when it came to other factors such as employment, investment and orders.
In both manufacturing and the service sector, the employment index dropped below 50, suggesting a potential rise in unemployment over the coming months. When it comes to investment and cashflow, manufacturing rose to 50.7 from 41.3 while the service sector fell from 45.3 to 43.3.
On domestic sales, the service sector recorded a score of 44.1 from 40.4 while the manufacturing sector fell from a strong 73.4 in the previous quarter to 56.3. The situation was reversed for overseas orders, with services falling from 41.7 to 37.2 and in manufacturing it rose slightly from 48.3 to 48.9.
All of the responses taken together created an overall economic outlook figure of 53.0 up from 51.5 in the final quarter of 2020.
Sean Rose, Policy Officer of the Coventry and Warwickshire Chamber of Commerce, said: “When you take into consideration that the first three months of 2021 saw our leisure, hospitality and events sector still closed along with non-essential retail, as well as the fact that the new trading relationship with the EU was just kicking in, these results paint a reasonably positive mood among our businesses.
“There is no question that the past 12 months have bitten hard but through a combination of government help, excellent local and regional support and businesses’ own resilience, firms are looking forward to getting back to doing what they do best.
“That said, it’s going to take several months to really understand how our economy is going to recover and some of the confidence will have been brought on by the rapid roll out of the vaccine and the fact businesses are looking forward to trading again.
“That’s why our QES surveys are going to be vitally important in the year ahead to make sure we have our finger on the economic pulse, but we can certainly draw confidence from our survey of 2021 without being complacent.”
Steve Harcourt, director of Prime Accountants Group, said: “The start of 2021 began with the third, and potentially the toughest, lockdown the country had endured yet.
“Non-essential businesses were once again forced to close as we stayed home to save the NHS and allow time for the vaccine rollout to continue. With this fortunately running as expected and with an end to restrictions are now in sight, many businesses are now able to reopen in the second quarter which I am sure will be a welcomed step as these businesses attempt to make up for lost time.
“A positive outlook appears to be one held by business leaders across Coventry and Warwickshire, after the local service sector business confidence index soared this quarter with more than 75 per cent predicting an increase or to maintain their profit levels within the next quarter, which is likely as life starts looking that bit more normal.
“With a clear path now laid out by the Government and proposed dates so far going ahead as planned, it comes as no surprise that local services have seen a surge in orders, as everyone prepares for normal life to return once more.
“These orders are providing businesses with the positive boost they need, after a year of uncertainty and we can hope that the number of sales, and in turn profit, will also follow suit and rise as businesses come back to full capacity. We should now all continue to do our bit and support local businesses where possible.”
Sunny Parekh, Senior Economist at Warwickshire County Council, said: “Coventry and Warwickshire’s overall economic outlook index in the first quarter of 2021 continues to gather momentum in terms of a bounce back from the lows experienced in 2020.
“This comes despite local businesses in both the manufacturing and services sector having to navigate their way through a third national lockdown and post-Brexit related issues, further solidifying the resilient and robust nature of Coventry and Warwickshire’s economy.
“The roll-out of the vaccination programme alongside the announcement of the easing of lockdown restrictions has created significant upsurges in business confidence particularly within the service sector, making for encouraging reading. There is no doubt that there are still challenging times ahead, however, with the economy opening up, there does seem to be a brighter outlook on the horizon.”
Pictured: Louise Bennett (Chamber) with Steve Harcourt (Prime Accountants Group)