The survey, which is delivered in partnership with Prime Accountants Group and measures how business owners are feeling, is analysed by the Business Intelligence Service at Warwickshire County Council.
From the responses of businesses across the service and manufacturing sectors, it gives scores out of 100, where anything above 50 indicates growth and anything below 50 is negative.
It looks at a range of aspects of doing business in the region, including the outlook for employment, investment, confidence, and current and future order books for both domestic and overseas sales.
The survey showed that the overall economic outlook has a score of 47.8, down from 53.5 in the previous quarter.
It also showed a fall in sales domestically and internationally.
Corin Crane, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “The latest QES results reflects what we have heard anecdotally when speaking to firms at our Local Business Forums and on a day-to-day basis. The uncertainty is taking its toll.
“We are on the cusp of publishing our Business Manifesto for the region and that sets out some of the barriers to growth and some of the solutions to support firms to invest and expand.
“Once the manifesto is released, we will be campaigning hard to ensure the Government – under a new Prime Minister – set the right conditions for growth.”
Steve Harcourt, director of Prime Accountants Group, said: “The results point to a broad-based slowdown in economic activity across the region, driven primarily by weaker domestic demand and declining manufacturing performance.
“While employment in the services sector remains relatively strong and manufacturing investment has shown modest improvement, businesses are likely to remain cautious in the short to medium term as they navigate softer market conditions and reduced confidence.
“A number of these factors are driven by global events and not UK or Midlands-based economic activity but they are, without doubt, having an impact on the regional outlook.”
Todd Williams, Business Intelligence Analyst (Economy and Skills) at Warwickshire County Council, said: “Quarter two at a national level fell modestly primarily due to a decrease in domestic services output, despite a jump in orders for the manufacturing sector to get ahead of price rises due to the war in Iran. Employment at the national level dropped for the 20th consecutive month in the services sector.
“Meanwhile, the latest QES results shows similarities and differences for the local economy. Local sentiment around domestic sales became pessimistic for both the services and manufacturing sectors.
“Overseas sales for the local manufacturing sector also fell, whilst overseas sales for the local services sector remained soft. Overall investment showed continued weakness, however cashflow for the manufacturing sector improved. The local manufacturing sector does not report that it has enjoyed the short-term surge in sales at the national level.
“Local concerns around labour costs remain significant for both the services and manufacturing sectors, with the manufacturing sector also being very concerned about raw materials and fuel.
“Inflation and corporate taxation have overtaken business rates as the most significant concerns for both the services and manufacturing sectors. Local recruitment efforts are strong, with the majority experiencing recruitment difficulties. Well over half of local manufacturing and service sector respondents indicate that they are currently operating below full capacity.
“The results show that the overall economic outlook index for Coventry and Warwickshire on par with the national trend in many ways. Nevertheless, very weak local sentiments around domestic sales, manufacturing exports, recruitment, and investment are a concern.”
Summary of 2026 Q2 PMI:
Economic Outlook:
Overall, 47.8, down from 53.5
Service Sector 47.6, down from 52.6
Manufacturing Sector 48.2, down from 58.9
Domestic Sales:
Service Sector 42.0, down from 53.3
Manufacturing Sector 44.4, down from 58.9
Overseas Sales:
Service Sector 46.0, flat from 45.4
Manufacturing Sector 38.5, down from 50.0
Employment:
Service Sector 61.2, down from 65.2
Manufacturing Sector 47.4, down from 73.7
Investment & Cashflow:
Service Sector 41.1, down from 43.1
Manufacturing Sector 46.4, up from 43.6
Business Confidence:
Service Sector 48.0, down from 55.0
Manufacturing Sector 58.7, down from 66.7
