Business confidence hits 'six month high' in West Midlands

The NatWest Regional Growth Tracker showed the region's busineses were more optimistic about their prospects than anywhere else in the UK, and last month's poll recorded the highest level of confidence in the West Midlands since last August.

However the region also posted the second highest level of employment losses of anywhere in the country, with jobs shed at the fastest rate for nearly five years.

The West Midlands Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – rose from 47.2 to 48.7.

"West Midlands firms became even more optimistic about future business activity in February, as highlighted by our latest Regional Growth Tracker data," said Lisa Phillips, Regional Managing Director, Midlands and East, Commercial Mid Markets.

"Advertising, investment, tourism and the planned launch of new products were seen as key growth opportunities. 

"While customers remained cautious about ordering behaviour, local companies only trimmed output volumes to a modest extent, highlighting resilience and a commitment to navigating the current landscape. 

"Even with cost inflation accelerating as suppliers pass on increases in labour costs, local firms raised their own selling prices to broadly the same extent as in January as they focused on securing new business. Attempts to keep a lid on expenses resulted in job shedding, however.”  

Although private sector output continued to fall, February's contraction was modest and eased since the start of 2025.

Some companies linked a decline in activity to price pressures and the loss of existing clients, but other firms pointed to an expected recovery in new contract wins, which helped lift the headline index markedly on the month.

Businesses in the West Midlands observed a further increase in operating expenses during February, with the overall rate of inflation climbing to its highest since March 2023. Local firms reported greater outlays on energy, food, fuel, labour, freight and insurance premiums.

February data showed that companies continued to pass-on their additional cost burdens with customers, as selling prices rose further. The rate of charge inflation was little-changed from January.

Private sector sales in the West Midlands also decreased for the fourth straight month midway through the first quarter, falling at the fastest rate in close to two-and-a-half years. 

Polled companies said that clients were "reluctant to commit to new contracts amid economic uncertainty and budgetary challenges".