South West confidence bounces back – Lloyds
Business confidence in the South West rose nine points in November to five per cent, the first positive reading this quarter, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
The survey was conducted between November 1 and 15, before the Chancellor’s Autumn Statement announcement on Thursday, November 17.
Companies in the region reported higher confidence in their own business prospects month-on-month, up 10 points to 19 per cent.
When taken alongside their optimism in the economy, up nine points to -9 per cent, this gives a headline confidence reading of five per cent.
South West businesses identified their top target areas for growth in the next six months as investing in their teams (37 per cent), evolving product or service offerings (36 per cent), and investing in sustainability (25 per cent).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 11 per cent of businesses in the region expect to increase staff levels over the next year, up four points on last month – the highest reading since August this year.
Overall UK business confidence fell five points during November, but remained positive at 10 per cent.
Firms’ outlook on their future trading prospects was down two points to 25 per cent, and their optimism in the wider economy dropped four points to -2 per cent.
Despite a seven-point dip, UK businesses remained positive about hiring intentions with 14 per cent of firms aiming to create new jobs in the next 12 months.
All UK regions and nations, apart from the South East, reported a positive confidence reading in November, with seven recording a month-on-month increase in confidence.
Of those recording an increase in confidence, Scotland (up 19 points to 24 per cent), Wales (up 12 points to 17 per cent) and the South West (up nine points to five per cent) saw the largest monthly changes, with Scotland now the most optimistic overall.
Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: “Despite a tough economic environment, it encouraging to see business confidence rising for the first time in two months.
“With Christmas on the horizon, those in the retail and hospitality sectors will be hoping for a welcome boost in trade. But as we enter the end of the year, many will be considering what the New Year will bring, and taking on headwinds including rising prices will be top of the list for most. Taking action now to review working capital and cashflow, negotiate with suppliers and invest in teams will pay dividends for the coming months.”
Business confidence in retail increased to 15 per cent (up from nine per cent), perhaps reflecting a renewed confidence in trading prospects ahead of the festive season.
However, business confidence in the manufacturing sector fell for the sixth month in a row, to four per cent, down nine points, the lowest confidence level since early 2021.
The construction sector held gains made in October, remaining unchanged at 20 per cent, although this level still remains weaker than in the first half of the year.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Given the recent political and economic landscape, it comes as little surprise that economic optimism and business confidence have fallen this month.
"Pay growth expectations remain high by historical standards, which could signal ongoing difficulties ahead for businesses to fill vacancies.
"Looking ahead, it will be interesting to see if the clearer policy picture provided by the Autumn Statement will lead to business confidence moving in a more positive direction as we go into 2023.”
