Business confidence reaches highest level this year

Business confidence in the North West jumped 20 points last month, setting it at its highest level this year.

According to the latest Business Barometer from Lloyds Bank Commercial Banking, business confidence has risen to 54 per cent.

The study was conducted between 1st-15th November, before the chancellor’s Autumn Statement announcement on Wednesday 22nd November.

Companies reported higher confidence in their own business prospects month-on-month, up 17 points at 59 per cent. When taken alongside their optimism in the economy, up 22 points to 48 per cent, this gives a headline confidence reading of 54 per cent.  

North West businesses identified their top target areas for growth in the next six months as introducing new technology (38 per cent), entering new markets (34 per cent) and evolving their offer (34 per cent).

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

A net balance of 45 per cent of businesses in the region expect to increase staff levels over the next year, up eight points on last month. 

Overall UK business confidence rose three points in November from 39 per cent to 42 per cent, the third consecutive monthly increase, while firms’ outlook on the overall UK economy increased four points to 38 per cent.

Firms in the services industry reported an increase in confidence to 46% (up three points), the highest level for over two years (since September 2021), reflecting broad-based optimism in the sector.

Retail confidence also rose for a second month to 42% (up five points), while sentiment among manufacturing firms reached a five-month high of 45% (up nine points) in contrast with recent shortfalls.

Construction firms’ confidence improved for the first time in three months to 35% (up four points), but this still lags other sectors.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise.

“It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter.

“Our next survey in December will reveal how firms are digesting the measures announced in the chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”