'Fewer businesses are attempting to recruit yet hiring difficulties have intensified' - Chamber report

Greater Birmingham Chambers of Commerce’s latest Quarterly Business Report reveals the extent of operational and supply chain disruptions facing firms during Q4.

The trading conditions have led to weakening domestic demand, a scaling back in investment in training and fewer businesses attempting to hire.

Of the companies surveyed, 24 per cent reported an overall decline in sales - the highest since Q1 2021.

A quarter of services firms also reported a decrease in bookings (up from 17 per cent last quarter).

Similarly, the number of firms attempting to recruit dropped to 47 per cent, the lowest level since Q1 2021.

In the past three months, 69 per cent of firms reported experiencing difficulties filling vacancies (up from 60 per cent) - the highest level recorded since Q4 2023.

And 10 per cent of firms now expect their workforce to decrease (compared to six per cent in Q3).

Investment in training also fell sharply, as 27 per cent of businesses revised their plans for training investment downwards.

Raj Kandola, acting deputy CEO of Greater Birmingham Chambers of Commerce, said: “After a gradual drift across 2025, both domestic sales and advance orders eased again this quarter to their weakest levels since early 2021.

“Against a backdrop of subdued national data and recent operational disruptions felt across parts of our supply chain, it is clear that many firms are navigating a more demanding trading environment.

“Labour market signals also merit close attention. Fewer businesses are attempting to recruit yet hiring difficulties have intensified, especially in sectors that are critical to our export base.

“At the same time, while capital investment intentions have edged up, investment in training has slipped into negative territory for the first time since 2021.

“That should concern all of us - without sustained investment in people, the region’s medium-term productivity and competitiveness will suffer. Price pressures, meanwhile, are shifting rather than disappearing.”

In contrast, export conditions improved, indicating a recovery after mid-year weakness.

The share of firms reporting increased export sales rose to 27 per cent in Q4, up from (20 per cent in Q3), while export orders and bookings increased to 23 per cent, compared with 15 per cent in Q3.

Mr Kandola added: “Although headline export balances improved this quarter – particularly in manufacturing – we should treat this with caution.

“Ongoing tariff announcements by the US administration risk adding fresh volatility to international demand and planning cycles for local exporters.

“If the government is serious about unlocking growth in 2026, we need a stable policy environment that avoids further tax burdens on business and prioritises measures that crowd in investment, boost skills and accelerate energy efficiency.”

The Quarterly Business Report, the largest economic report of its kind in the region, is sponsored by Birmingham City University.

Heike Schuster-James, associate director, business development, at the university, said: “Domestic demand declined further in the latest quarter, in line with the weakening trend observed throughout the year.

“In the West Midlands, universities are helping businesses respond to economic pressures through initiatives such as CreaTech Frontiers, led by Birmingham City University with academic and cultural partners.

“The programme provides funding, mentoring, R&D labs and access to specialist facilities - enabling creative SMEs to innovate in areas like immersive technologies, AI, and gaming, while building skills and supporting business growth.”

A launch event for the Q4 report is taking place on Thursday February 5 at Birmingham City University’s Curzon Building, where a panel will discuss developing workforce skills in Greater Birmingham.