Confidence in South West business dips but still looks strong
Business confidence in the South West fell for the first time since July, dropping 14 points to 34% in November, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the South West reported lower confidence in their own business prospects month-on-month, down 19 points at 29%. When taken alongside their optimism in the economy, down nine points to 39, this gives a headline confidence reading of 34%.
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 37% of businesses in the region expect to increase staff levels over the next year, down two points on last month, but well above the UK average of 30%.
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, the East of England and South East – reporting an increase on October’s data.
Firms in London (down two points to 63%) remained the most confidence for 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%).
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking, said: “Despite the small dip in confidence, it’s reassuring to see businesses are feeling positive as we head into Christmas – not least those in the region’s first-class hospitality and tourism sector, who are gearing up for a busy festive period.
“Job creation remains high on the agenda, with firms planning on increasing staffing levels over the next 12 months, something that will ultimately help drive the region’s economic recovery.”
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 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.”