Business confidence in the South West rose 27 points during April to 45%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the South West reported higher confidence in their own business prospects month-on-month, up 25 points at 53%. When taken alongside their optimism in the economy, up 27 points to 36%, this gives a headline confidence reading of 45% (vs. 18% in March).

South West businesses identified their top target areas for growth in the next six months as evolving their offerings with new products and services (37%) and investing in their teams, including hiring new staff and investing in training (34%).

Just under a third (29%) said they planned to enter new markets or invest in new technology.

A net balance of 33% of businesses in the region also expect to increase staff levels over the next year, up 38 points on last month.

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

Overall, UK business confidence held steady at 42% in April, the same level as recorded in March and February.

While firms' confidence in their own prospects dipped marginally by four points to 45%, their confidence in the economy rose by four points to 39%. Meanwhile, the net balance of companies planning to increase staff levels over the coming 12 months climbed six points to 33%.

Businesses in the manufacturing sector reported increased confidence this month, recording an increased score of 45% (up 4 points) which is the highest level for three months. Similarly, confidence among firms in the services sector (42%) and construction (41%) also improved, largely driven by greater economic optimism.

In retail, confidence pulled back slightly from last month's strong showing to 40%, illustrating that confidence in this sector remains fragile. Retail is also more liable to be impacted by external factors such as the poor weather.

Amanda Dorel, regional director for the South West, Lloyds Bank Commercial Banking, said: "Rebounding confidence among South West businesses comes amid fast-changing economic conditions, particularly slowing inflation - which could improve the region's growth outlook.

"Businesses remain focused on taking advantage of opportunities. Encouragingly, we're seeing investing in teams as one of the top priorities. This is especially important for the region's strong hospitality and tourism firms as they head into the crucial summer season after a damp start to the year.

"Whatever their ambitions, we'll continue to be by the side of South West firms with our insight and funding to help them capitalise on further growth opportunities."

Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: "We are beginning to see a consistent trend emerge from our barometer results in recent months. Businesses are feeling increasingly confident about the economy, coinciding with falling inflation and hopes that interest rates will start to fall this year.

"There continues to be a mixed picture among the regions, with the biggest rises seen in Wales and the South West. The strongest confidence was reported in the East of England, with confidence rising for the third consecutive month. Confidence in the North East eased slightly but remained strong in April.

"The second quarter of 2024 has started brightly for businesses, and we are seeing firms expressing greater confidence in an enduring economic recovery."