West Midlands businesses remain confident despite economic headwinds - Lloyds
Business confidence in the West Midlands fell eight points during November to 19 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1st-15th November, before the Chancellor’s Autumn Statement announcement on Thursday the 17th November.
Companies in the region reported marginally lower confidence in their own business prospects month-on-month, down one point at 38 per cent. When taken alongside their optimism in the economy, down 16 points to -1 per cent, this gives a headline confidence reading of 19 per cent.
West Midlands businesses identified their top target areas for growth in the next six months as investing in their team (36 per cent), evolving their offering (32 per cent) and diversifying into new markets (30 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 3 per cent of businesses in the region expect to increase staff levels over the next year, down 19 points on last month.
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 5 per cent) saw the largest monthly changes, with Scotland now the most optimistic overall.
Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Throughout the recent economic and political turbulence, we have continued to see West Midlands businesses remain among the most confidence in the UK, and November is no different.
“The positivity we’ve seen is a real testament to the strength of businesses in the region and it will serve them well as we enter the final furlongs of the year.
"Firms’ ability to view challenges as opportunities is clear as they focus on investing in their teams, helping to tackle labour shortage issues in the region and encourage growth.
"As they lean into the challenges ahead, notably in addressing how inflation is impacting their operations, we’ll be by their side with advice and guidance.”
Business confidence in retail increased to 15 per cent (up from 9 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 4 per cent, down 9 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.”
