Sharp increase in business confidence through August

August's Business Barometer from Lloyds Bank Commercial Banking shows a seven percentage point increase in North West business confidence, up to 34 per cent.

It represents the third month of consecutive growth, and puts confidence at its highest since February last year when it reached 42 per cent.

In the survey of 1,200 businesses, 46 per cent had confidence in their own enterprise, but this was tempered by confidence in the overall economy which dipped to 22 per cent.

North West businesses identified their top target areas for growth in the next six months as investing in their teams (44 per cent), entering into new markets (40 per cent) and evolving their offer (32 per cent).

A net balance of 28 per cent of businesses in the region expect to increase staff levels over the next year, up three points on last month. 

Across the wider UK, confidence jumped 10 points to 41 per cent, again the highest since February last year. 

The construction, retail and service sectors all saw a rise in business confidence in August. Services gained 12 points to reach a 22-month high of 42 per cent, while retail firms were up nine points to 44 per cent, an 18-month high. Construction firms’ confidence also increased by 11 points to a four-month high of 42 per cent. In contrast, manufacturing confidence fell for a second consecutive month with a 4-point decline to 30 per cent, taking it to the lowest level since April 2023.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “It’s encouraging to see firms' confidence in their trading prospects continue to rise, with many companies set on targeting growth through investment in their teams as they plan for a promising future."

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “The bounce in economic optimism this month is the standout point. Our analysis shows that businesses felt relief that interest rates may be reaching their peak, alongside hopes that measures to tackle inflation are having an impact. With trading prospects remaining stable, and hiring and wage intentions also rising, the macro environment for small businesses and those outside the manufacturing sector is more upbeat.

“From the data, large firms and manufacturers are experiencing some degree of caution, which is likely to reflect the wider global economic environment and, for manufacturing, the rotation of spending towards services.”