NW business confidence increases but remains near record low
Business confidence in the North West increased 10 points during May to -25%, but remained near historic lows, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported higher confidence in their business prospects month-on-month at -10%.
When taken alongside their views of the economy overall, this gives a headline confidence reading of -25%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
In an illustration of the impact COVID-19 is having on the region’s business, the majority of firms continued to see demand negatively affected during May, with the picture relatively unchanged month-on-month.
The barometer found 79% experienced a fall in demand for their products and services, up one point on the month before.
Meanwhile, six per cent experienced an increase in demand, down one point on April.
The number of firms in the region operating at less than 50% capacity decreased six points to 43%. Almost a quarter (23%) weren’t operating at all, up from 18% in April.
Of the 73% of businesses reporting disruption to their supply chain during May, 30% expected the situation to improve within three months, while 11% expected it would take more than 12 months to return to normal levels.
Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Our data shows that many firms are still grappling with reduced demand, and almost a quarter have paused operations.
“However, confidence is beginning to creep back after April’s low, which is encouraging.
“We’re committed to helping firms across all sectors overcome the challenges being presented during this difficult time.”
Across the UK, business confidence held steady month-on-month, dipping just one point to -33%.
The North East and London both saw confidence rise month-on-month, scoring the joint-highest confidence reading at -20%. The South West recorded lowest confidence at -51%, compared with -35% the month prior.
From a regional perspective, despite all being in negative sentiment, six of the 12 regions reported a higher confidence in May. The North East was the least negative region at -20%. The South West was the most negative region at -51% followed by the South East at -45%.
In May, the construction sector saw the sharpest decline, falling 24 percentage points to -44%.
However, all the three other major sectors saw a modest increase. The retail sector increased eight points to -25%, while manufacturing rose to -27% and services saw a small increase of four points to -18%.
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Despite the results partly capturing the period since the Government’s announcement of an initial easing of restrictions, trading conditions remain difficult for most firms.
“Nevertheless, a further relaxation of constraints will enable more businesses to resume their activities.”