Lloyds Bank’s Business Barometer shows South West firm’s optimism in the economy on the rise

Lloyds Bank

Business confidence in the South West rose by four points in August to 37%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the South West reported marginally lower confidence in their own business prospects month-on-month, down four points at 25%hen taken alongside their optimism in the economy, up 11 points to 48%, this gives a headline confidence reading of 37%.

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

A net balance of 16% of businesses in the region expect to increase staff levels over the next year, down 11 points on last month.

Overall UK business confidence rose six points in August, reaching 36%, the highest level recorded since May 2018. When asked about their overall trading prospects businesses reported a six-point increase on July’s reading at 34% and firms’ confidence in the economy also increased six points to 39%.

All UK nations and regions had a positive confidence reading in August. The most confident regions were the North West (64%), North East (46%) and London (41%).

All bar three areas reported a growth in confidence in August, with the East Midlands (down 10 points to 28%), West Midlands (down three points to 27%) and Yorkshire and Humber (down two points to 26%) reporting marginal falls.

David Beaumont, Regional Director for the South West at Lloyds Bank Commercial Banking, said: “It’s encouraging to see business confidence remain high in the South West, especially among our region’s leading tourism and hospitality businesses, who are enjoying a healthy period of trading during the peak summer season.

“Despite the challenges posed by ongoing labour shortages, firms remain buoyant about their recruitment plans over the next 12 months, which will play a vital role in stimulating the regional economy.”

In sector terms, there was notable strength in sectors benefiting from the further easing of Covid restrictions. Services confidence saw the greatest month-on-month increase, rising by 8 points to 36%, the highest level since January 2018.

Confidence in both manufacturing and construction also picked up (both up 7 points to 40%), led by rises in trading prospects for the year ahead. The increase in manufacturing confidence came despite ongoing supply disruptions, although the level remains below the high in May.

Retail confidence posted a smaller 2-point rise to 34%, remaining below the recent peak in May.

Hann-Ju Ho, Senior Economist for Lloyds Bank Commercial Banking, said: “Business confidence reaching its highest level in over four years tells a positive story about the country’s economic recovery. This confidence is driven by the continued success of the vaccine rollout, the removal of lockdown restrictions and adjustments to self-isolation rules.

“Staff shortages remain a challenge, but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead.”