Latest survey reveals business confidence rising amid challenges
“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, and that is encouraging reading."
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.
The optimism emerged from Coventry and Warwickshire Chamber of Commerce’s first Quarterly Economic Survey of 2021, delivered in partnership with Prime Accountants Group with analysed by the Economy & Skills Group at Warwickshire County Council.
Alongside the rising confidence, however, many concern remain about the economic recovery following Covid-19.
The report's 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.
Of 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.
There were mixed responses regarding 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.
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. It further solidifies 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, and that is 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.”
Sean Rose, Policy Officer of the Coventry and Warwickshire Chamber of Commerce, said: “When you consider 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.
“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.”