Business confidence dips, but optimism remains strong with NW firms

Business confidence in the North West fell three points during July to 27%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the North West reported lower confidence in their own business prospects month-on-month, down nine points at 29%. When taken alongside their optimism in the economy, up three points to 24%, this gives a headline confidence reading of 27%.

North West businesses identified their top target areas for growth in the next six months as evolving their offer (45%), introducing new technology (34%) and investing in their teams (27%).

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

A net balance of 25% of businesses in the region expect to increase staff levels over the next year, up 14 points on last month.

Overall, UK business confidence dipped by six points to 31% in July, with nine out of 11 regions and nations reporting a lower confidence reading month-on-month.

Optimism in the economy has also fallen, dropping 11 points to 21%, the lowest levels since February this year.

However, firms remained resilient in their own trading prospects, with 43% of companies expecting business activity to increase over the next 12 months, up one point on last month and reaching a 14-month high.

Despite the fall in overall confidence, levels remain higher than the survey’s long term average reading of 28% and every UK region and nation reported a positive confidence reading in July. The North East reported the highest levels of business confidence at 43% (down four points on last month), followed by Yorkshire (down seven points month-on-month) and the West Midlands (up two points month-on-month) both at 38%.

Retail was the only broad sector registering higher confidence (up six points to 35%), mostly reflecting stronger transport services.

The fall in overall business confidence this month was led by the service sector sentiment falling by seven points to 30%. While the fall in confidence was seen broadly across this sector, hospitality firms appeared to be more resilient.

Confidence also was lower in manufacturing (down 16 points to 34%) and construction (down eight points to 31%).

Martyn Kendrick, regional director for North West at Lloyds Bank Commercial Banking, said: “Despite a small drop in overall business confidence, it’s encouraging to see that firms in the North West are feeling more optimistic about the economy as inflationary pressures begin to ease.

“Of course, a rise in optimism often goes hand-in-hand with growth and many of the regions businesses are identifying new avenues of development by investing in their teams.”