Region’s business confidence falls as Covid cases rise
Business confidence in the West Midlands has dropped as coronavirus cases in the area increased, with companies reporting lower confidence in their own business prospects while hiring intentions fell significantly.
Business confidence fell nine points during October to -15%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the West Midlands reported lower confidence in their own business prospects month-on-month at -13%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -15%.
When it comes to businesses’ hiring intentions, a net balance of 21% expect to reduce staff levels over the next year. This compares to a net balance of 1% that had expected to boost staff levels in September.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Across the UK, overall confidence dropped seven points month-on-month to -18%. While confidence about businesses’ own trading prospects dipped by only one point, their optimism in the economy fell by 14 points. UK business confidence has remained in negative territory since April, but the picture had been improving until October, with confidence steadily rising since May.
Amanda Dorel, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “Given the demand-dampening impact of rising cases of COVID-19 across the West Midlands and the threat that some local areas could soon move into tier three restrictions, the more pessimistic outlook by our region’s firms this month is unsurprising.
“The stricter lockdown to try and safeguard the community comes at an economic cost with measurers limiting many businesses’ ability to trade. We continue to stand by their side as they navigate an evolving and unprecedented landscape.”
National overview
The North West had the highest confidence in October at -2%, followed by the East of England (-8%), and North East (-10%). Meanwhile, optimism fell 21 points in Yorkshire to -29%, making it the least confident UK region.
In the industry sectors, services slipped back, with confidence declining by fourteen points to -24%. The decline was driven by hospitality and arts and leisure grappling with the implications of recently introduced measures to tackle the pandemic. Manufacturing and retail logged modest improvements, up three points to -15% and up one point to -7% respectively.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The resurgence in coronavirus cases and the reintroduction of local lockdown measures saw overall business confidence fall back sharply this month. Added to that are ongoing uncertainties regarding new trading arrangements with the EU in January. All of this makes the economic outlook uncertain and the period ahead will be pivotal for businesses as they navigate the winter months and continue to adapt to the evolving landscape.”
