NW business confidence rises as employers plan to expand workforce

Business confidence in the North West rose four points during March, to 35%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

The poll was conducted between the March 1-15, ahead of the Chancellor’s Spring Budget on March 15.

Companies in the North West reported lower confidence in their own business prospects month-on-month, down four points at 35%. When taken alongside their optimism in the economy, up 12 points to 35%, this gives a headline confidence reading of 35%.

North West businesses identified their top target areas for growth in the next six months as investing in their team (36%), investing in sustainability (30%), and diversifying into new markets (29%).

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

A net balance of 45% of businesses in the region expect to increase staff levels over the next year, up 20 points on last month.

Overall UK business confidence climbed 11 points to 32% in March, with firms reporting their highest confidence levels since May last year.

On average, firms felt positive about their own trading prospects with 39% of firms expecting business activity to increase in the next 12 months, up eight points on last month and 25% said they would increase staff levels by this time next year, up five points month-on-month.

Every UK region and nation had a positive confidence reading in March, with eight out of 11 regions recording a month-on-month increase in confidence.

For the second month in a row the West Midlands reported the highest levels of business confidence at 48% (unchanged month-on-month) followed by Scotland (up 24 points), London (up 20 points), and the North East (up two points) all at 38%.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “It’s great to see that businesses across the region are setting their sights on avenues for growth.

“Many firms in the North West are planning to bolster their workforce. The intention to hire new staff is at its highest level in 12 months – showcasing ambitions to boost capacity as firms target expansion.”

There was a broad rise in business confidence across the sectors, particularly in construction (47% up 28 points) and manufacturing (37% up 10 points) both at a 10-month high and retail (32% up 11 points) the highest since February 2022.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has seen a surge this month with economic optimism and trading prospects bolstering firms. With hiring intentions improving, we may see employment growth picking up in the coming months.

“Tentative signs of easing wage pressures suggest that businesses’ difficulties in finding staff may have started to ease.

“Although the measures in the Budget were widely trailed, it is yet to be seen what the full impact of the Chancellor’s announcement, along with the surprise rise in inflation and recent increase in interest rates, will have had on business confidence.”