South West business confidence falls for third successive month

Business confidence in the South West of England fell four points during August to 15%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the South West reported lower confidence in their business prospects, which fell five points to 13%, and lower economic optimism, down three points to 16%.

Together, this gives an overall confidence of 15%, which is four points below last month’s figure of 19%.

Despite this, companies’ hiring intentions showed a net balance of 24% of businesses in the region expect to hire more staff during the next 12 months, up four points on last month.

Nationally, overall confidence fell six points to 23% as firms’ optimism about the economy dropped eight points to 17%. Businesses’ confidence in their own business prospects dropped five points to 29%.

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

Adam Rainey, regional director for the South West at Lloyds Bank Commercial Banking, said: “We have witnessed a steady decline in confidence from firms across the South West over the last three months.

“Despite the fall in optimism, it seems management teams are looking ahead and preparing for an improvement in prospects, with an uplift in hiring intentions.

“It’s important that firms continue to seek trusted advice and make targeted investments for growth – even in a period of uncertainty.”

Across the region, a net balance of 6% of businesses said they felt the UK’s exit from the European Union was having a positive impact on their expectations for business activity, up 10 points on a month ago.

Regional picture

Businesses in London and the West Midlands showed the most confidence, both at 37%, ahead of the North West (35%).

Those in the South East were the least confident, with an overall confidence of just 8%, 15 points below the national average.

Sectors

From a sector perspective, firms in the manufacturing sector remained most confident at 38%, but confidence of construction businesses fell sharply by ‑12 points to 36%, closely followed by consumer services (‑6 points to 22%) and other services (‑6 points to 18%).

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking commented: “Business confidence was resilient in the first half of the year, but has eased back recently. This reflects changes in perceptions of Brexit risks, which underscores the importance of current EU-UK negotiations.”