Economic outlook in Coventry & Warwickshire improves - but only just
The economic outlook for Coventry and Warwickshire improved by the smallest of margins in the third quarter of 2019 – despite a significant downward shift in confidence in the manufacturing sector.
The Coventry and Warwickshire Chamber of Commerce’s latest Quarterly Economic Survey (QES) showed the overall economy in the region is bucking the national trend but that warning signs coming from industry must be heeded.
The survey, which is partnered by Prime Accountants and analysed by Warwickshire County Council, is a barometer for the regional economy and also feeds into the British Chambers of Commerce’s national survey.
It showed that in Coventry and Warwickshire domestic orders, overseas orders and advanced orders in manufacturing had fallen, which proved to be a drag on confidence amongst the sector.
This was offset by a small improvement in the service sector which led to an overall rise in the wider economic outlook for the region.
Warwickshire County Council’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.
The outlook for Coventry and Warwickshire grew from 60.9 to 61.0 in Q3 compared to Q2 but industry leaders are warning that the increased uncertainty is starting to bear down on business.
Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “The improvement in the economic outlook for Coventry and Warwickshire is small but it is not insignificant. It shows, once again, just how robust our economy is and that we continue to buck national trends.
“We are seeing a strengthening service sector, which has shown growth in domestic orders although there was a fall in overseas orders.
“The biggest area for concern comes from manufacturing where both domestic and overseas orders fell, which has naturally had an effect on confidence in the sector.
“When you look at the bigger picture, the uncertainty that is hanging over firms across Coventry and Warwickshire – and the UK as a whole – has proved to be a real drag on business confidence.
“The latest Quarterly Economic Survey shows that companies across Coventry and Warwickshire have weathered the last two to three years but they really do need certainty and confidence to invest and grow for the future.”
Steve Harcourt, Director Prime Accountants Group, said: “This quarter’s results show Coventry and Warwickshire continues to punch above the national average in regards to the overall economic outlook for the country.
“As part of our input to the survey we asked businesses if over the next year they would anticipate cashflow, investment in plant, machinery, equipment and training to increase, stay the same or decrease? The majority of businesses indicated they were expecting to maintain their current level of investment which is understandable considering the Brexit uncertainly.
“There are marginal gains throughout the index which indicates businesses are starting to feel more positive compared to last quarter, especially in the service sector which accounts for 80 per cent of the UK economy. The warning signs in the rest of the UK are clear though, as the service sector contracts.
“As we move towards a Brexit resolution businesses can start to adjust to the implications of the outcome. It’s encouraging seeing the region performing better than the national average and having statistics to back up the current consensus should reassure businesses and investors that we are still open for business.”