Business confidence bounces back in East Midlands

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Business confidence in the East Midlands bounced back from a dip in June, rising seven points during July to 38%, the second highest score of any region across the UK, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the East Midlands reported higher confidence in their own business prospects month-on-month, up two points at 26% – one of only three regions to do so. When taken alongside their optimism in the economy, up 10 points to 47%, this gives a headline confidence reading of 38%.

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

A net balance of 9% of businesses in the region expect to increase staff levels over the next year, down nine points on last month.

Overall UK business confidence dipped three points to 30% in July but remains well above the year-to-date average of 19%. Businesses in the North East (40%), East Midlands (38%) and North West (38%) were the most optimistic overall.

In July, four regions reported an increase in confidence: alongside the East Midlands (up seven points to 38%), the North East (up 13 points to 40%), North West (up nine points to 38%), and West Midlands (up one point to 30%) reported an increase, while the remainder reported a drop.

Scotland (down 14 points to 28%), East of England (down 11 points to 25%) and Wales (down nine points to 12%) reported the biggest falls in confidence but all retained an overall positive reading.

The overall number of UK firms expecting planning to create new jobs in the next twelve months rose one point to 18% in July, the highest reading since November 2018 and the sixth consecutive month that employment expectations have risen.

Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “It’s great to see that East Midland’s firms are reporting a sixth consecutive month of positive confidence readings and are now among the most confident in the UK.

“Businesses will be entering the month ahead with a renewed optimism now restrictions have eased but for some there is still a lingering sense of caution amid the uncertainty over whether Covid-19 cases will rise.

“We will work with local businesses to help them navigate any changes or new challenges that they face in the months ahead.”

Confidence fell slightly in the broad economic sectors in line with the overall economic picture. Manufacturing and retail confidence declined for a second month from previously elevated levels. Nevertheless, at 33% (down from 35%) for manufacturing and 32% (down from 36%) for retail, confidence remains at historically strong levels. Construction and services sector confidence also dipped to 33% (from 35%) and 28% (from 31%), respectively.

In the subsectors, confidence was particularly strong in hospitality (63%, up from 38%), and transport (53%, up from 37%), reflecting the further opening of the economy, as well as in business services & finance. Employment and pay growth expectations were also especially strong in these subsectors as well as in construction.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “A sixth consecutive monthly increase in employment expectations alongside an increase in pay growth predictions continues to highlight the resilience of UK businesses despite a slight dip in overall business confidence. With COVID-19 restrictions having now been significantly eased in parts of the UK we can have further confidence in firms’ outlook for the UK economy.”