Recruitment difficulties could be a 'drag ' on rising business confidence- report

An economic report published today by the Greater Birmingham Chambers of Commerce, in collaboration with the Black Country and Coventry & Warwickshire Chambers of Commerce, revealed that domestic and international sales figures are continuing to improve for businesses in the West Midlands compared to this time last year.

The latest results from the Quarterly Economic Snapshot show that nearly half (49 per cent) of businesses surveyed saw an increase in sales in Q3 of 2021, compared to 31 per cent in Q3 of 2020.

Twenty-seven per cent of firms reported that their overseas sales have also increased in the last quarter, with the percentage of firms expecting to increase their sales next quarter (45 per cent) also increasing by 17 per cent compared to this time last year.

This beats the previous Q2 result of 2021 (25 per cent), becoming the highest figure recorded since the start of the pandemic and contrasts starkly with the 8 per cent recorded during the first national lockdown (Q2 2020) last year.

In terms of business resilience, 67 per cent of businesses across the West Midlands expect to increase their turnover over the course of the next 12 months, which is lower than last quarter (72 per cent). However, this is still a 24 per cent increase compared to Q3 of 2020.

Only 11 per cent of service sector firms surveyed expect their profits to fall over the course of the next year, which is a 3 per cent improvement on last quarter. This is slightly higher for manufacturers with 24 per cent of the businesses surveyed expecting their profits to decrease over the next 12 months.

However, the number of firms reporting hiring challenges are still increasing this quarter with 62 per cent of firms attempting to recruit struggling to do so. This represents a 5 per cent increase compared to last quarter, which was the highest figure since Q2 2019.

Businesses also continue to face pressure to raise prices, with 46 per cent of firms anticipating an increase in the next 3 months compared to 21per cent this time last year.

This has significantly affected both the manufacturing and service sector, with 61 per cent of manufacturing firms surveyed expecting their prices to increase over the next 3 months compared to 37 per cent the previous quarter. The percentage of service firms expecting to have to increase their prices rose from 23 per cent to 41 per cent this quarter.

The snapshot, which covers the West Midlands Combined Authority area, is the most comprehensive regular report of its kind in the region. The data is collected from quarterly surveys conducted by Greater Birmingham Chambers of Commerce (GBCC), Black Country Chamber of Commerce (BCCC) and Coventry & Warwickshire Chamber of Commerce (C&WCC).

Click here to access the full report.

Commenting on the results, Henrietta Brealey (pictured), chief executive of the GBCC, said: “Local business confidence continued to improve this quarter, but rising recruitment difficulties remain a potential drag on growth. Data collected this period shows an increase in balance scores across all areas compared to Q3 2020 and many of these now indicate growth, which wasn 't the case last year. We are also seeing from the national data that employment rates are on the rise in the West Midlands compared to last year, with projections as of October 2021 suggesting that this will increase further in Quarter 4.

“Despite the promising figures outlined above there is still disruption within the labour market caused by the pandemic and Brexit, and we 've seen an increase of 5 per cent in the number of businesses experiencing recruitment difficulties during the reporting period. This has hit the manufacturing sector particularly hard. Wider data also suggests that the continuing supply-chain issues, labour and skills shortages in both services and manufacturing have also been a major factor affecting recruitment in the region in Q3.

“In summary, while there remain challenges ahead across the emerging energy crisis and ongoing fallout from COVID-19, these results are promising. We hope to see this confidence continue to build through Q4 and provide a springboard for an economic recovery as we head into next year. ”