WEST MIDLANDS QUARTERLY ECONOMIC SNAPSHOT
Q4 2024
HENRIETTA BREALEY
CEO, GREATER BIRMINGHAM CHAMBERS OF COMMERCE: COMMENT ON EXPORT TRENDS
The latest West Midlands Quarterly Economic Snapshot highlights stagnant export trends in Q4 2024, with the overall export sales balance score flatlining at the same level as Q3. The latter half of the year has clearly presented challenges to businesses trading internationally which is reflected in the fact that fewer than one fifth increased their export sales during Q3 and Q4 in comparison to an average of a quarter in Q1 and Q2.
Regional variations were evident, with Greater Birmingham performing above the West Midlands average and clear challenges being highlighted in Coventry and Warwickshire. Manufacturers showed modest export growth, having improved since the previous quarter, though still below the figures recorded earlier on in the year. Meanwhile, the service sector saw a slight decline between Q3 and Q4 and a significant drop from mid-2024’s figure which showed almost a quarter of respondents reporting increased export sales. On a broader scale, the latest data on the total value of West Midlands exports shows a decline, which is also reflected in national trends where the total value of UK exports also fell, indicating wider economic pressures.
While the region’s businesses remain resilient, the disparity between manufacturing and services, as well as between subregions, suggests underlying challenges for exporters who are already grappling with geopolitical uncertainty. As Chambers of Commerce, we offer support to businesses trading internationally with documentation, training, translation services, connections to key stakeholders and local internationally minded businesses. We are also offering a free programme, ‘Exporting Starts Here’, to support businesses in high-growth clusters to export their goods or services. For more information, please visit our website.
CORIN CRANE
CEO, COVENTRY AND WARWICKSHIRE CHAMBER OF COMMERCE: COMMENT ON BUSINESS CONFIDENCE TRENDS
Businesses across the region have been extremely resilient over the past few years, with so many factors – global and domestic – weighing heavy on the economy, from Brexit to Covid.
Growth in the economy has been relatively flat and, yet, businesses on this patch have still managed to innovate, invest and grow and that has been reflected in the latest Quarterly Economic Survey.
However, it’s vitally important that this is not taken for granted by decision-makers and it’s crucial that the Government does everything it can to create conditions for growth that allows businesses in our region to continue to thrive. The Budget saw National Insurance contributions increase which has added significantly to companies’ cost base so while firms in the region remain, broadly, confident about the future, they want greater certainty to allow them to plan for the next stage of growth.
SARAH MOORHOUSE
CEO, BLACK COUNTRY CHAMBER OF COMMERCE:
COMMENT
ON RECRUITMENT TRENDS
The latest data from Q4 shows a slight improvement overall in attracting the right talent into member businesses across the region. Our surveys tell us that in the last quarter it’s become less difficult to recruit with 54% of respondents now reporting difficulties compared with 62% in the previous quarter.
Geographically once again businesses in Greater Birmingham are experiencing the biggest hiring challenges, especially in the manufacturing sector, whilst in Coventry and Warwickshire businesses are struggling to recruit particularly in the service sector. The Black Country is reporting less difficulties than its neighbours with 40% of businesses experiencing recruitment challenges across both sectors
There is a consistent need for skilled and technical staff which is such an important area as businesses look to develop and play their part in economic growth across the wider region.
Overall recruitment challenges will be exacerbated by existing skills gaps, ongoing cost pressures and labour costs, as well as the impact of pressures from the global economy. Our collective mission is to work together to ensure the West Midlands is presented as an ambitious and innovative region, attracting the best people into our businesses.
RECRUITMENT TRENDS –
RECRUITMENT DIFFICULTIES (QES DATA)
In Q4 2024, 54% of firms across the region looking to recruit experienced challenges doing so, having decreased from 62% in Q3. Throughout 2024, recruitment difficulties remained stubbornly high with between 60–62% citing challenges in this area, therefore this pressure easing off at the end of the year will have been welcomed by businesses. Furthermore, Q4 2024’s figure is 15 percentage points lower than one year ago in Q4 2023.
Greater Birmingham continues to experience more intense pressures around recruitment than elsewhere in the region, with 66% of firms citing recent experience of hiring difficulties. In Coventry and Warwickshire, this accounts for 59% of businesses and 40% in the Black Country.
By sector, 68% of manufacturers reported recruitment difficulties throughout Q4, which decreased from 79% the previous quarter. While this is the lowest figure recorded since Q4 2022 within this sector, manufacturing firms continue to face greater difficulties when hiring than the cross-sectoral average. Conversely, 51% of services firms cited hiring challenges in Q4, which fell from 59% in Q3 and is the lowest figure recorded for this sector since Q1 2021.
REGIONAL VS. NATIONAL EMPLOYMENT STATISTICS*
In October to December 2024, the UK’s employment rate was 74.9%, having increased by 0.1 percentage point since July to September 2024. The West Midlands employment rate was slightly lower at 74.3%, having seen an increase of 0.5 percentage points since the previous three-month period.
The highest employment rate in the UK between October to December 2024 was in the Southwest (78.8%) and the lowest was in Wales (70.0%).
During this same time period, the UK’s unemployment rate was 4.4%, having risen by 0.1 percentage points since July to September. The figure recorded for the West Midlands was slightly lower than the national rate at 4.3%, having fallen by 0.3 percentage points since the previous three months period.
*Please note that the
EXPORT TRENDS
EXPORT TRENDS (QES DATA)
The balance score for export sales across the region in Q4 remained stable at 50. All measures of export sales volumes remained constant between Q3 and Q4.
18% of businesses across the region reported an increase in export sales.
63% reported that export sales had remained constant.
20%
of firms reported a decrease in sales.
Looking at the geographical breakdown of West Midlands exporters increasing their overseas sales, Greater Birmingham experienced the strongest levels of growth, with 33% reporting an increase in export sales throughout Q4. In comparison, 20% of exporters in the Black Country increased their sales and only 7% in Coventry and Warwickshire.
27%
of manufacturers saw an increase in their export sales (up from 21% in Q3), which is similar to the figure of 26% recorded this time last year but still below the peak of 31% citing export sales growth in Q2 2024. This is in contrast to 14% of those in the service sector (down slightly from 16% in Q3), which marks a decline in export sales growth, especially compared to mid-2024 when 23% were reporting increased sales volumes.
EXPORT TRENDS
REGIONAL VS. NATIONAL TRADE STATISTICS
£8.1 billion
The total value of West Midlands exports in Q3 2024 was £8.1bn, having decreased from £8.8bn in Q2 2024.
£84.5 billion
The total value of EU exports from the West Midlands decreased from £3.7bn in Q2 to £3.3bn in Q3, while the total value of non-EU exports from the region decreased from £5.1bn in Q2 to £4.8bn in Q3.
Nationally, the total value of exports decreased between Q2 and Q3 from £87.9bn to £84.5bn.
The UK total value of EU exports saw a decrease from £43.9bn to £42.0bn between Q2 and Q3. Conversely, the value of non-EU exports also fell within this time period from £44.0bn to £42.5bn.
BUSINESS RESILIENCE
BUSINESS RESILIENCE (QES DATA)
The balance score for price pressures rose by 6 points to 77 in Q4 2024 and 55% of businesses expected to increase their prices in the next 3 months (up from 42% in Q3).
66% of manufacturers across the region expected their prices to increase over the following 3 months, having increased significantly since 35% in Q3, whilst 53% of service firms anticipated increasing prices, up from 43% last quarter.
Price pressures were most prevalent in Coventry and Warwickshire, where 62% of firms indicated a need to raise their prices over the next 3 months, followed by 56% in the Black Country and 50% in Greater Birmingham.
The overall balance score for cashflow in Q4 was 49, which is 4 points lower than the previous quarter and marks the first time this figure fell into negative territory (below 50) since Q4 2022. This was based on:
23%
51%
26%
23% seeing their cashflow improve over the past three months, down from 27% in Q3.
51% experiencing constancy in cashflow, having decreased by one point since last quarter.
26% reporting a worsening of their cashflow situation, up from 21% in Q3.
18%
18% of manufacturing firms saw their cashflow improve in Q4, which has remained constant since Q3.
24% The number of services firms reporting an improvement in cashflow sits at 24%, down from 29% last quarter.
The balance score for cashflow decreased by 7 points to 42 for manufacturers and decreased by 4 points to 50 for services firms.
BUSINESS INVESTMENT
BUSINESS INVESTMENT (QES DATA)
Across the region:
19%
19% of firms across the West Midlands increased their capex investment in Q4, having fallen by 3 percentage points compared to the previous quarter. 59% maintained existing levels of spending in this area, down from 62% in Q3, while 22% revised their investment plans downwards.
22% of firms in Greater Birmingham increased their capex investment in Q4, closely followed by 21% in Coventry and Warwickshire and 14% in the Black Country.
The regional balance score for manufacturers in Q4 is 43, having fallen from 51 in Q3. The balance score for services firms also follows the declining trend but to a lesser extent, having fallen from 53 in Q3 to 50 on Q4.
PRICE PRESSURES AND INVESTMENT LEVELS
PRICE PRESSURES AND INVESTMENT LEVELS (UK TRENDS)
CPIH: 3.5% increase
CPI: 2.5% increase
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.5% in the 12 months to December 2024, unchanged from November. On a monthly basis, CPIH rose by 0.3% in December 2024, down from 0.4% in December 2023.
The Consumer Prices Index (CPI) rose by 2.5% in the 12 months to December 2024, down from 2.6% in the 12 months to November. On a monthly basis, CPI rose by 0.3% in December 2024, down from 0.4% in December 2023.
The largest downward contribution to the monthly change in both CPIH and CPI annual rates came from restaurants and hotels, while the largest upward contribution to both came from transport.
BUSINESS CONFIDENCE
BUSINESS CONFIDENCE (QES DATA)
The balance score for profitability projections in the West Midlands reached 60 in Q4, a decrease of 10 points on last quarter. This figure comes from:
44% expecting an increase in profits over the next 12 months (a decrease of 10 percentage points compared to the previous quarter).
31% expecting profits to remain constant (unchanged compared to Q3).
25% expecting profits to decrease (a 9-percentage point increase compared to Q3).
The balance score for turnover projections fell to 69 down from 76 This was based on 54% of businesses reporting an increase in expected turnover over the next 12 months, 30% expecting constancy and 16% anticipating a decrease.
BUSINESS CONFIDENCE (UK TRENDS)
Monthly real gross domestic product (GDP) is estimated to have grown by 0.4% in December 2024, largely because of growth in the service sector, following an unrevised growth of 0.1% in November 2024.
Real GDP is estimated to have grown by 0.1% in the three months to December 2024, compared with the three months to September 2024, mainly because of growth in the services sector.
Monthly services output grew by 0.4% in December 2024, following growth of 0.2% in November 2024 (revised up from 0.1% growth in our previous publication), and grew by 0.2% in the three months to December 2024.
Annually, output GDP is estimated to have grown by 0.8% in 2024 compared with 2023.
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 and HMRC. 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 Q3 Quarterly Economic Snapshot took place between 19th August and 13th September.
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, 457 businesses across the West Midlands completed the Quarterly Economic Survey with 81% of respondents operating in the services sector and 19% 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.
GREATER BIRMINGHAM CHAMBERS OF COMMERCE
The Greater Birmingham Chambers of Commerce (GBCC) is here to connect, support and grow local businesses. Accredited by the British Chambers, we have acted as the voice of local businesses since 1813. GET IN TOUCH
W: www.greaterbirminghamchambers.com
E: policy@birmingham-chamber.com
T: @grbhamchambers
BLACK COUNTRY CHAMBER OF COMMERCE
The Black Country Chamber of Commerce is a membership organisation that provides support to businesses throughout Dudley, Sandwell, Walsall and Wolverhampton. Black Country Chamber provide help, advice and a range of services.
GET IN TOUCH
W: www.blackcountrychamber.co.uk
E: website@blackcountrychamber.co.uk
T: @BCCCmembers
COVENTRY AND WARWICKSHIRE CHAMBER OF COMMERCE
The Coventry & Warwickshire Chamber of Commerce is a business membership organisation with five branches across the region – Rugby, Coventry, Mid, North and South Warwickshire.
GET IN TOUCH
W: www.cw-chamber.co.uk
E: info@cw-chamber.co.uk
T: @CWCC
For more information on this report, please contact Gemma Dilkes at g.dilkes@birmingham-chamber.com