Lloyds: sun is scarce but we're making hay
By Simon Hacker | 1st September 2023
Despite today's Punchline report on new figures on insolvency in the South West, commercial confidence in the region rose 12 points during August to 46 per cent – making it the highest reading since February 2022.
According to the latest Business Barometer from Lloyds Bank Commercial Banking (LBCB), the upbeat news for business showed Gloucestershire companies are feeling more sure of their own business prospects. And despite the washout summer, they're making hay.
Month-on-month, the index rose two points to 49% and when factoring optimism in the economy, which businesses showed was up 23 points to 43 per cent, the analysis concluded that confidence stood at 46 per cent.
The analysis, which included Gloucestershire acitivity in the regional picture, identified that the top target areas for growth in the next six months were:
● Introducing new technology (31%)
● Diversifying into new markets (30 %)
● Investing in teams (29%).
The Business Barometer surveys 1,200 businesses every month and can be seen as an early warning system on economic trends. Further findings include data that showed a net balance of 35% of South West businesses expect to reduce staff levels over the next year – down 3% on last month.
Overall, UK business confidence increased to its highest level since February last year, rising 10 points to 41% in August.
The South West fits into a national pattern, with 11 regions and nations reporting a positive business confidence reading in August. Optimism in the UK economy also increased in the same month by 16 points to 37 per cent, while the number of businesses expecting an increase in trading prospects rose by 3 points to 46%.
Sector-wise, construction, retail and service sectors all saw a rise in confidence in August. Services gained 12 points to reach a 22-month high of 42%, while retail firms were up nine points to 44%, representing an 18-month high.
Construction sector confidence increased by 11 points, to a four-month high of 42%, though manufacturing confidence fell for a second consecutive month with a 4-point decline to 30%, taking it to the lowest level since April 2023.
Amanda Dorel, South West regional director at LBCB said: "It's great to see confidence in the region rebounding to reach the highest levels we've seen in 18 months.
"Businesses are making hay while the sun is shining too, with many taking advantage of buoyed consumer spirits and looking at opportunities to grow, be it by investing in their teams or diversifying into new areas.
"Those who continue manage their working capital and keep a close eye tight margins will be well positioned for the coming months."
Hann-Ju Ho, LBCB Senior Economist, added: "The bounce in economic optimism this month is the standout point.
"Our analysis shows that businesses felt relief that interest rates may be reaching their peak, alongside hopes that measures to tackle inflation are having an impact.
"With trading prospects remaining stable, and hiring and wage intentions also rising, the macro environment for small businesses and those outside the manufacturing sector is more upbeat.
"From the data, large firms and manufacturers are experiencing some degree of caution, which is likely to reflect the wider global economic environment and, for manufacturing, the rotation of spending towards services."
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