Lloyds Bank: South East business confidence rises to highest level since May

South East climbed to its highest level since May in November, rising 13 points to 34%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.   

Companies in the region reported higher confidence in their own business prospects month-on-month, up seven points at 31%. When taken alongside their optimism in the economy, up 18 points to 37%, this gives a headline confidence reading of 34%.  

The Business Barometer questions 1,200 businesses monthly.  

A net balance of 23% of businesses in the region expect to increase staff levels over the next year, up five points on last month.   

Overall, UK business confidence was buoyant in November at 40%, down just three points on October’s reading of 43%. Both firms’ confidence in their own trading prospects and optimism in the economy remained comfortably in positive territory, each dipping just three points month-on-month to 39% and 41% respectively.

All UK nations and regions had positive confidence readings in November, with three regions – Wales and the East of England along with the South East – reporting an increase on October’s data. Firms in London (down two points to 63%) remained the most confident for a third month in a row, followed by the North East (down 16 points to 45%), the West Midlands (down eight points to 42%) and East Midlands (down 13 points to 42%). A net balance of 30% of firms across the UK reported plans to create new jobs in the next twelve months, with hiring intentions strongest in London (41%), Wales (37%) and the South West (37%).

Paul Evans, regional director for the South East at Lloyds Bank Commercial Banking, said: 

“South East firms are clearly feeling more buoyant as we approach the end of another challenging year for companies everywhere. The region’s famous tourism and hospitality sectors in particular will be hoping for a bustling and disruption-free 2022."

“Whatever lies ahead, we will remain by the side of South East businesses to help them grow and look forward to a bright future.”

At a sector level, confidence slipped in manufacturing (42%), to its lowest since August, linked to the persistence of supply-chain disruptions, while it fell to a seven-month low of 28% in construction.

In contrast, the retail sector (45%) bucked the trend with a pickup in confidence, reflecting hopes for higher spending ahead as the festive period approaches. Services confidence (41%) fell slightly, with strong growth for financial & business services and communications offset by more downbeat responses from education, health and public administration.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: 

“Business confidence remains robust above the long-term average, but it dipped this month as economic optimism and trading prospects were affected by the persistence of rising costs and supply chain issues."

“Pay expectations remain elevated with a quarter of businesses anticipating rises of 3% or more in the next 12 months which will add to business costs, but it bodes well for staff facing into economic challenges.”