Survey of West Midlands’ businesses indicates deepening economic downturn

Birmingham Chamber of Commerce and IndustryThe latest survey results from the region’s Chambers of Commerce point to a further worsening of the business environment.

The Quarterly Economic Survey results for the 3 months to December 2008 highlight the difficult trading conditions faced by businesses in the West Midlands.

The situation has deteriorated for both manufacturers and service providers. Key findings for the West Midlands are:

Manufacturing

Domestic sales and orders have continued to deteriorate. The percentage balance of firms reporting increases in the last quarter compared to those reporting decreases is -43%, the worst result since 1995. The situation is likely to worsen with the balance for advanced orders decreasing to -52%.

Export sales deteriorated over the quarter despite the fall in sterling; however the percentage balance for export orders improved marginally from -10% to -9%.

Employment levels have deteriorated further with nearly 1 in 3 firms reporting decreases in employment in the preceding 3 months and the same percentage planning further decreases in the forthcoming quarter.

Reported conditions for cashflow are at their lowest levels since 1995, while planned investment in capital and training have all been cut back significantly.

Business confidence has worsened, with nearly 3 times as many firms expecting profitability to decline in the next 12 months compared to those who expect to experience improved profitability.

Services

As with manufacturing domestic sales and bookings have continued to deteriorate. The percentage balance of firms reporting increases compared to those reporting decreases was -25%, the worst result since 1995. Future bookings are expected to fall further with a balance of -33%.

Employment prospects have fallen significantly over the period. For the first time since 1995 more firms reported decreasing their workforce than increasing, with the prospects for the next 3 months indicating a further contraction in employment.

Business confidence has also been severely squeezed with more firms expecting turnover and profitability to fall than rise, the first negative balance since data was available in 1995.

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