North West firms less pessimistic in July as lockdown eases

Business confidence in the North West rose 16 points during July to -15%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North West reported higher confidence in their own business prospects month-on-month at -20%.

When taken alongside their views of the economy overall, this gives a headline confidence reading of -15%.

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

The majority of firms continued to see demand negatively affected by coronavirus during July, with the picture holding steady month on month.

Seventy per cent experienced a fall in demand for their products and services, down five points on the month before.

Meanwhile, seven per cent experienced an increase in demand, down four points month on June.

When asked about job retention among firms with furloughed staff, only a third (32%) expect to retain more than 90% of their staff.

A third (33%) of North West firms surveyed said they weren’t currently using the Job Retention Scheme.

When asked about social distancing measures, more than half (58%) said they could, in theory, operate at full capacity while remaining COVID-secured, although a third (32%) said they couldn’t operate full within the rules.

Of the 64% of businesses reporting disruption to their supply chain during July, 42% expected the situation to improve within six months, while only seven per cent 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: “North West firms are edging closer towards having an optimistic outlook once again, as key sectors reopen post-lockdown and trading opportunities pick back up.

“However, there remains a long road ahead to recovery.

“Lingering supply chain disruption and weakened demand are just two of many key challenges facing companies.”

At national level, UK business confidence increased eight points to -22% during July.

The North East was the most confident region at minus three per cent, followed by the West Midlands (minus seven per cent) and the North West (-15%). Wales and Scotland were the least confident with -31% and -37%m respectively.

In July, the retail sector increased 11 points to -12%, manufacturing increased 14 points to -21% and services rose 10 points to -26%.

However, construction fell eight points to -22% after last month’s strong increase of 30 percentage points.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “While the results suggest the economy is starting to see some improvement, economic confidence still remains in deep negative territory.

“The Government announcement of the slight easing of social distancing measures has now enabled over half of businesses to reach their capacity and resume their usual activities.

“However, how businesses will continue to respond to the Job Retention Scheme will be key in the coming months.”