West Midlands business confidence resilient - Lloyds Bank
Business confidence in the West Midlands fell one point during May to 30 per cent, 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 five points at 37 per cent. When taken alongside their optimism in the economy, down eight points to 22 per cent, this gives a headline confidence reading of 30 per cent.
West Midlands businesses identified their top target areas for growth in the next six months as introducing new technology (43 per cent), evolving their offer (37 per cent) and investing in sustainability (36 per cent).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
Read more: West Midlands business confidence is highest in UK – Lloyds Bank
A net balance of 27 per cent of businesses in the region expect to increase staff levels over the next year, up nine points on last month.
Overall UK business confidence dropped five points to 28 per cent in May. Despite the dip, every UK nation and region report a positive confidence reading.
As the country celebrated the Coronation, London reported the highest levels of business confidence at 43 per cent (down four points on last month), followed by the North East at 35 per cent (down six points month-on-month). Alongside the West Midlands, the South East and South West also reported high readings in May, all at 30 per cent.
Firms remain optimistic about their own trading prospects, with a net balance of 34% expecting business activity to increase over the next 12 months, down just five points on last month.
Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Businesses demonstrated their resilience as confidence held steady in May. The West Midlands was one of just two regions to record an increase in the number of firms expecting strong trading conditions for the year ahead, a sure sign of the region’s optimism.
Read more: West Midlands business confidence grows in January - Lloyds Bank
“As the warm weather returns, businesses in the retail and leisure sectors will be hoping for a boost to footfall and customer spending. To help during busy periods, firms should keep a close eye on managing their working capital and unlock financial support when they need it to capitlise on growth opportunities.”
Confidence among manufacturers increased to a one-year high of 40 per cent (up from 29 per cent), while retail registered a more modest two point rise to 26%, and construction remained robust at 34 per cent despite its monthly nine point decline. Services confidence, however, fell back to 26 per cent from 36 per cent, almost erasing last month’s rise. Overall, confidence across the broad sectors remains above levels at the start of the year.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “As the economic environment remains challenging, compounded by stubborn inflation and higher wage pressures, business confidence has dipped slightly this month as firms feel cautious about the wider economy and their own trading prospects.
“However, while firms’ trading prospects and economic optimism both eased back, they still remain in positive territory as the UK has avoided an outright contraction in GDP - indicating a certain amount of underlying resilience in the economy.”
