Businesses in Coventry and Warwickshire began 2023 with improving confidence, bucking the national trend and in the face of a range of issues that are holding back growth.
Manufacturing in the region looks to be particularly resurgent according to the Coventry and Warwickshire Chamber of Commerce’s latest Quarterly Economic Survey (QES) which was conducted with firms across the city and the county at the tail end of last year.
The results, published this week, show an uptick in manufacturing orders both at home and overseas, and rising confidence in manufacturing and the service sector.
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 neutral and anything above is positive and anything below means the reverse.
As well as being a barometer for the local economy, the results are fed into the British Chambers of Commerce’s national QES.
Confidence in the service sector grew from a score of 50.6 in the third quarter of 2022 to 55.5. In manufacturing it jumped from 52.3 to 65.0.
There were improved numbers when it comes to employment in both manufacturing and services.
However, it was less of a glowing picture when it comes to investment and cashflow as both sectors saw their scores slip below 50.
Manufacturing saw growth in domestic orders and international sales too, while the service sector saw a slowdown in homegrown orders and a slight upturn internationally.
All of which added to an overall economic outlook of 52.9 – one point higher than the previous survey, which stood at 51.9.
Corin Crane, Chief Executive of the Coventry and Warwickshire Chamber of Commerce, said: “The QES is an incredible insight into the way businesses across our patch are feeling and what their outlook is.
“In light of all of the domestic and global issues, it’s great to see firms feeling a little more confident at the turn of the year.
“I am particularly pleased to see international sales improving both in the manufacturing and service sectors. There is absolutely no question that companies who trade overseas give themselves a much better chance of growth over a sustained period.
“The issues that are affecting firms who trade with Europe have not gone away and there is still work to be done by Governments on both sides of the Channel to improve trading conditions for businesses.
“However, the results are encouraging and I’d advise firms from across Coventry and Warwickshire to get in touch with the team at the Chamber to find out how we can support them.”
Steve Harcourt, director of Prime Accountants, said: “I am pleased to see businesses in Coventry and Warwickshire feeling more positive.
“The results around the labour market and employment are very interesting to see and, while they are positive in terms of businesses still looking to recruit that does, of course, exacerbate the issue we saw a great deal of in 2022 – firms not being able to bring in the skilled people they need.
“The Chamber is leading on the new Local Skills Improvement Plan (LSIP) in this region and we’d encourage businesses to engage with us on that because it is a vital piece of work that is helping to address an issue that has been talked about over many years.”
Sunny Parekh, Senior Economist at Warwickshire County Council, said: “Quarter four at a national level experienced a modest weakening as household spending was squeezed and economic uncertainty weighed heavy on demand levels.
“However, the latest QES results show the local economy remaining resolute and robust in the face of economic adversity.
“The results show that the overall economic outlook index for Coventry and Warwickshire bucked the national trend by increasing further into positive territory, showing overall signs of optimism amongst both local services and manufacturing businesses.
“Business confidence experienced a boost, particularly within the manufacturing sector as profitability expectations increased despite ongoing price pressures. The upbeat nature of the local business landscape in the final quarter of 2022 bodes well, especially as forecasts point towards a long road to economic recovery.”
Summary of 2022 Q4 Key Numbers:
Economic Outlook:
Overall, 52.9, up from 51.9
Service Sector 51.6, down from 52.2.
Manufacturing Sector 57.7, up from 49.8.
Domestic Sales:
Service Sector 52.0, down from 59.0.
Manufacturing Sector 58.8, up from 45.2
Overseas Sales:
Service Sector 45.6, up from 42.3.
Manufacturing Sector 54.9, up from 47.1.
Employment
Service Sector 57.4, up from 57.1
Manufacturing Sector 59.8, up from 50.0.
Investment & Cashflow
Service Sector 45.9, down from 59.2.
Manufacturing Sector 49.4, down from 51.5.
Business Confidence
Service Sector 55.5, up from 50.6.
Manufacturing Sector 65.0, up from 52.3.