North West firms report biggest confidence increase of all UK regions in February

Martyn Kendrick

Business confidence in the North West rose 18 points during February to 13%, 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, up 13 points at 10%.

When taken alongside their views of the economy, up 23 points to 16%, this gives a headline confidence reading of 13%.

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

When it comes to jobs, a net balance of five per cent of businesses in the region expect to reduce staff levels over the next year, down five points on last month.

Across the UK, overall business confidence rose in February as the Government announced it would be creating a ‘roadmap’ out of lockdown.

Confidence increased by nine points to two per cent, the first net positive reading since March 2020.

Firms’ economic optimism also jumped 12 points month-on-month to two per cent.

All UK nations and regions saw a month-on-month increase in confidence in February, with the biggest increases in the North West (13% vs minus five per cent in January), the East Midlands (10% vs minus eight per cent in January), Wales (minus five per cent vs -20% in January) and Scotland (-17% vs -32% in January).

Despite this, four remained in net negative territory with Wales (minus five per cent), the South West (minus six per cent), the East of England (minus eight per cent), and Scotland (-17%) all in the red.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Confidence levels recorded in the North West are the highest we’ve seen in 11 months.

“Increasing economic optimism and an improved outlook on jobs also point to an increasingly hopeful business community here in our region.”

Confidence increased across all four broad industry sectors to the highest levels since March 2020.

After a soft start to the year, manufacturing jumped by 14 points to five per cent, while construction rose eight points to seven per cent. Confidence in retail extended nine points to three per cent, while services advanced by 10 points to one per cent, led by broad-based improvements in the subsectors.

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “The uplift in business confidence and its entry into positive territory after nearly a year suggests that firms are cautiously pinning their hopes on economic revival in the future and the continued success of the vaccine rollout.

“In the coming weeks, announcements in the Budget and prospects of an easing of lockdown restrictions will hopefully help to bolster the recovery in business confidence as the economy starts to reopen.”