Confidence rises in the South West

Business confidence in the South West rose 27 points during April to 45 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking. 

Companies in the South West reported higher confidence in their own business prospects month-on-month, up 25 points at 53 per cent. When taken alongside their optimism in the economy, up 27 points to 36 per cent, this gives a headline confidence reading of 45 per cent (versus 18 per cent in March). 

South West businesses identified their top target areas for growth in the next six months as evolving their offerings with new products and services and investing in their teams, including hiring new staff and investing in training. Jut under a third said they planned to enter new markets or invest in new technology. 

A net balance of 33 per cent of businesses in the region also expect to increase staff levels over the next year, up 38 points on last month.  

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.  

Overall UK business confidence held steady at 42 per cent in April, the same level as recorded in March and February.  

While firms’ confidence in their own prospects dipped marginally by four points to 45 per cent, their confidence in the economy rose by four points to 39%. Meanwhile, the net balance of companies planning to increase staff levels over the coming 12 months climbed six points to 33 per cent.

The East of England was the most confident UK nation or region in April, followed by the Wales and the North East.
Businesses in the manufacturing sector reported increased confidence this month, recording an increased score of 45 per cent (up 4 points) which is the highest level for 3 months. Similarly, confidence among firms in the services sector and construction also improved, largely driven by greater economic optimism. 

In retail, confidence pulled back slightly from last month’s strong showing to 40%, illustrating that confidence in this sector remains fragile. Retail is also more liable to be impacted by external factors sectors other sectors do not face into, such as the poor weather. 

Amanda Dorel, Regional Director for the South West, Lloyds Bank Commercial Banking, said:

"Rebounding confidence among South West businesses comes amid fast-changing economic conditions, particularly slowing inflation – which could improve the region’s growth outlook.  “Businesses remain focused on taking advantage of opportunities. Encouragingly, we’re seeing investing in teams as one of the top priorities. This is especially important for the region's strong hospitality and tourism firms as they head into the crucial summer season after a damp start to the year.   “Whatever their ambitions, we’ll continue to by the side of South West firms with our insight and funding to help them capitalise on further growth opportunities.”   

Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, added: “We are beginning to see a consistent trend emerge from our Barometer results in recent months. Businesses are feeling increasingly confident about the economy, coinciding with falling inflation and hopes that interest rates will start to fall this year.   “There continues to be a mixed picture among the regions, with the biggest rises seen in Wales and the South West. The strongest confidence was reported in the East of England, with confidence rising for the third consecutive month. Confidence in the North East eased slightly but remained strong in April.   “The second quarter of 2024 has started brightly for businesses, and we are seeing firms expressing greater confidence in an enduring economic recovery.”