Quarterly Economic Snapshot

HENRIETTA BREALEY

CHIEF EXECUTIVE OFFICER, GREATER BIRMINGHAM CHAMBERS OF COMMERCE: COMMENT ON RECRUITMENT TRENDS

This quarter’s regional recruitment statistics show that difficulties have eased off since Q3, however, a challenging landscape remains with almost seven in ten businesses facing obstacles to accessing the talent they need. Closer sectoral analysis reveals that just over three-quarters of manufacturers have faced recruitment difficulties, in contrast to 68% of services firms. The recruitment landscape is much the same as the previous quarter in Greater Birmingham as figures have remained stubbornly high with 72% citing recruitment difficulties. More positive news emerges from Coventry and Warwickshire where there has been an 18 percentage-point decrease in businesses reporting recruitment difficulties (from 87% in Q3 to 69% in Q4), and the Black Country where 60% experienced challenges, which is 12 percentage points down on last quarter. It is promising to see the West Midlands employment rate growing slightly in the final three months of 2023, however the fact that the region’s unemployment rate is 1.1% above the national figure highlights the need for policymakers to do their utmost to get people into work and invest in skills training.

As Chambers of Commerce, we are on hand with expert advisers and networks to support businesses with the multifaceted challenges and opportunities faced in the current climate. Aligned to this, the GBCC’s upcoming Growth Through People conference helps boost organisational productivity and shares the latest best practice in leadership and management. More details can be found on our website.

SEAN ROSE

HEAD OF POLICY, COVENTRY AND WARWICKSHIRE CHAMBER OF COMMERCE: COMMENT ON EXPORT TRENDS

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. However, 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.

SARAH MOORHOUSE

CEO, BLACK COUNTRY CHAMBER OF COMMERCE: COMMENT ON BUSINESS CONFIDENCE

Business confidence is an area where the West Midlands consistently scores highly. Although business confidence is slightly lower in this quarter than in Q3, possibly foreshadowing the recent technical recession, it is still high at 65 points. There is cause for optimism in these figures, illustrated by 69% of companies expecting profits to remain steady or improve. We know that despite some headwinds, businesses have continued to invest in themselves, their machinery, and improving their processes. Expecting to see the payoff from this investment in the next twelve months is part of the reason for high confidence. Other businesses are developing new technology; others are recruiting new staff and expanding the services they offer. This demonstrates that, although the current challenging environment should not be lightly dismissed or underestimated, there is still potential for businesses to grow and expand. Businesses should use their local Chambers of Commerce for support and help with this, as well as the networking opportunities.

RECRUITMENT TRENDS - STATISTICS

RECRUITMENT DIFFICULTIES (QES DATA)

In Q4, 69% of firms experienced recruitment challenges, having decreased from 78% in Q3.

Such difficulties were most pertinent in Greater Birmingham, where 72% of firms struggled to attract staff.

69% struggled to recruit in Coventry and Warwickshire and 60% in the Black Country.

REGIONAL VS. NATIONAL EMPLOYMENT STATISTICS

0.1%

0.1%

Between September and November 2023, the employment rate in the West Midlands (for those aged 16-64) increased by 0.1 percentage point on the previous quarter to 75.2%.

The unemployment rate remained largely unchanged at 5.3% and the economic inactivity rate decreased by 0.1 percentage point to 20.6%.

These changes were mirrored in national figures: across the UK the employment rate increased by 0.1 percentage points on the quarter to 75.8%, the unemployment rate was largely unchanged at 4.2% and the economic inactivity rate decreased by 0.1 percentage points to 20.8%.

Annual growth in regular earnings (excluding bonuses) was 6.6% in September to November 2023, and annual growth in employees’ average total earnings (including bonuses) was 6.5% in September to November 2023.

Annual growth in real terms (adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay rose on the year by 1.3% in September to November 2023, and for regular pay rose on the year by 1.4%.

EXPORT TRENDS (QES DATA)

The balance score for export sales across the region has decreased by 8 points to 50, the lowest since Q1 2023.

22%

22% of businesses reported an increase in export sales (a decrease of 13 percentage points on Q3).

56% reported that export sales had remained constant (having increased from 45% in Q3).

of firms reported a decrease in sales (up slightly from 20%).

As for export orders, 20% have seen an increase over the past quarter, 56% report that they have remained the same, and 24% have recorded a decrease.

26%

of manufacturers saw an increase in their export sales, in contrast to 20% of those in the service sector.

REGIONAL VS. NATIONAL TRADE STATISTICS

£8.1 billion

The total value of exported goods from the West Midlands in Q3 2023 totalled £8.1 billion, a decrease in comparison to the £8.7 billion recorded in Q2 2023.

The West Midlands exported a total of £3.6 billion worth of goods to the EU, and £4.6 billion to destinations outside of the EU.

£88 billion

The UK’s total exports of goods was worth £88 billion in Q3 2023, in comparison to £91.6 billion in Q2.

The total value of EU exports in Q3 2023 remained the same as Q2 2023 at approximately £4.5 billion, and the total value of non-EU exports decreased from £46.1 billion to £43.5 billion during the same period.

BUSINESS RESILIENCE

BUSINESS RESILIENCE (QES DATA)

The balance score for price pressures rose by four points to 74 this quarter, marking the first increase following three consecutive quarterly decreases.

41% of manufacturers expect their prices to increase over the next 3 months, a decrease from 53% recorded in Q3, whilst 51% of services firms anticipate increasing price pressures, up from 40% in Q3.

In Coventry and Warwickshire, 65% of businesses are expecting an increase in price pressures, followed by 45% in Greater Birmingham, and 42% in the Black Country.

The overall balance score for cashflow in Q4 is 51, a decrease of 3 points compared to the previous quarter. This was based on:

25% seeing their cashflow increase over the past three months

51% experiencing constancy in cashflow

31% of manufacturing firms have seen their cashflow decrease this quarter, an increase of 13 percentage points on Q3. On the other hand, the number of services firms reporting a decrease in cashflow sits at 24%, which is two percentage points lower than last quarter.

The balance score for manufacturing firms’ cashflow has decreased by 11 points to 53 and has increased by one point to 50 for services firms.

24% reporting a decrease in cashflow

BUSINESS INVESTMENT

BUSINESS INVESTMENT (QES DATA)

Across the region:

8%

19% of firms reported an increase in investment plans for capital expenditure (capex), a decrease of 8 percentage points compared to the previous quarter. 63% report maintaining the same level of capex investment as in Q3, while 18% have revised their investment plans downwards.

21% of firms from both Greater Birmingham and the Black Country increased their capex investment, 13% in Coventry and Warwickshire.

The balance score for capital expenditure investment is 54 for manufacturers (a decrease of 7 points) and 50 for services firms (a decrease of 4 points).

PRICE PRESSURES AND INVESTMENT LEVELS

PRICE PRESSURES AND INVESTMENT LEVELS

(UK TRENDS)

4.2% increase

Fell 4.8% in Q3

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2% in the 12 months to December 2023, the same rate as in November, and on a monthly basis, CPIH rose by 0.4% in December 2023, the same rate as in December 2022.

The Consumer Prices Index (CPI) rose by 4.0% in the 12 months to December 2023, up from 3.9% in November, and the first time the rate has increased since February 2023.

The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from alcohol and tobacco while the largest downward contribution came from food and nonalcoholic beverages.

UK business investment fell 4.2% in Q3 (July to Sept) 2023 but is 2.8% above where it was the same quarter a year ago.

BUSINESS INVESTMENT

BUSINESS CONFIDENCE (UK TRENDS)

Monthly GDP is estimated to have fallen by 0.3% in October 2023, following growth of 0.2% in September. Monthly real gross domestic product (GDP), adjusted for inflation, is estimated to have shown no growth in the three months to October 2023, compared with the three months to July 2023.

Services output fell by 0.2% in October, driven by a fall in information and communication, and was the main contributor to the fall in growth in GDP. Production output fell by 0.8% in October 2023, driven by widespread declines in manufacturing.

BUSINESS CONFIDENCE (QES DATA)

The collective balance score for profitability projections is 65, a decrease of 2 points on last quarter. This figure comes from:

50% expecting an increase in profits over the next 12 months (a decrease of 2 percentage points compared to Q3)

29% expecting profits to remain constant (the same figure as Q3)

21% expected profits to decrease (a twopercentage point increase compared to Q3)

The balance score for turnover projections increased by one point to 73. This was based on 59% of companies reporting an increase in expected turnover, 28% expecting constancy and 13% anticipating a decrease.

ABOUT THE WEST MIDLANDS QUARTERLY ECONOMIC SNAPSHOT

The West Midlands Quarterly Economic Snapshot offers an up-to-date picture of the performance of the business community in the WMCA area. It is the most comprehensive, regular report of its kind in the region. Both the national and regional figures are informed by official statistics from bodies such as the Office for National Statistics, HIS Markit and the Chartered Institute of Procurement and Supply. WMCA area data is also gathered from quarterly economic surveys conducted by the Greater Birmingham Chambers of Commerce, Black Country Chamber of Commerce, and Coventry and Warwickshire Chamber of Commerce. The surveying period for the Q4 Quarterly Economic Snapshot took place between 6th – 29th November 2023.

The Quarterly Economic Surveys consist of information gathered from local businesses on key indicators such as sales, exports, recruitment plans and turnover projections. In total, 470 businesses across the West Midlands completed the Quarterly Economic Survey with 87% of respondents operating in the services sector and 13% operating in the manufacturing sector. Percentage balance figures are determined according to business responses to the indicators: an increase (multiplied by 1), remain constant (multiplied by 0.5), decrease (multiplied by 0). A score of over 50 is indicative of a growth sentiment. Note that figures may not always total exactly due to rounding differences.

OFFICIAL QES SPONSORS

BLACK COUNTRY CHAMBER OF COMMERCE

The Black Country Chamber of Commerce is the leading regional business support agency for firms based within or doing business across Dudley, Sandwell, Walsall and Wolverhampton.

We operate in a not-for-profit capacity and work hard for our members across the region’s business community.

Through our services and initiatives, we provide platforms and opportunities for businesses to grow, connect and become part of a thriving network which shines a spotlight on the amazing work local companies are doing and helps to make the Black Country a great place to do business.

GET IN TOUCH

Creative Industries Centre, University of Wolverhampton Science Park, Glaisher Drive Wolverhampton WV10 9TG

Discover more about the Black Country Chamber of Commerce

blackcountrychamber.co.uk | Tel: 0330 024 0820

GREATER BIRMINGAM CHAMBERS OF COMMERCE

The Chamber are here to unleash the potential of Greater Birmingham’s businesses. We give them the tools to build their profile and networks, access opportunities and learn from best practice locally, as well as trade internationally.

We are a not for profit business membership and support organisation that exists to Connect. Support. Grow. local businesses.

We’re in it for the long haul – we’ve been putting the us in business, since 1813. Today’s Chamber has over 2,500 members, ranging from young professionals and start-ups to multinational corporations.

The Chamber is an unwavering voice and champion of local businesses, working in partnership with stakeholders across the region to make Greater Birmingham the best possible place to work and do business.

GET IN TOUCH

7th Floor West Wing, 54 Hagley Road, Birmingham B16 8PE

Discover more about the Greater Birmingham Chambers of Commerce

greaterbirminghamchambers.com | Tel: 0121 454 6171

COVENTRY AND WARWICKSHIRE CHAMBER OF COMMERCE

We are a local hub for businesses to access a broad offer of business support.

We are one of 53 accredited Chambers of Commerce in the UK and together we make up a strong network of trusted champions of businesses, places and global trade.

At Coventry & Warwickshire Chamber of Commerce, we’re uniquely placed to help businesses of every size and sector. Meaning from micro-one-person businesses to our largest employers, we’re all in it together, locally, nationally and globally.

GET IN TOUCH

Chamber House, Cheetah Rd, Coventry CV1 2TL

Discover more about the Coventry and Warwickshire Chamber of Commerce

cw-chamber.co.uk | Tel: 024 7665 4321