Business confidence in the South West fell four points during October to -4 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking - conducted between 3rd-17th October.

Companies in the region reported higher confidence in their own business prospects month-on-month, up two points at 9per cent. When taken alongside their optimism in the economy, down 11 points to -18 per cent, this gives a headline confidence reading of -4 per cent.

Despite the dip in confidence, South West businesses identified their top target areas for growth in the next six months as investing in their teams (33 per cent), exploring new markets (26 per cent), and investing in sustainability (23 per cent).

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

A net balance of 7 per cent of South West businesses expect to increase staff levels over the next year, the same as last month.

Overall UK business confidence fell one point during October to 15 per cent, in line with the average over the last three months. Firms' outlook on their future trading prospects was up two points to 27 per cent, and a net balance of 21 per cent are planning to create new jobs, up four points on last month. However, business optimism in the wider economy dropped three points to 2 per cent.

Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: "Although South West businesses have concerns about the economy, their outlook on their own trading prospects - as we enter the busiest period of the year for many - is a more positive picture.

"In this kind of economic environment, cash flow is king. Firms that keep a close eye on margins and payments will be better positioned to weather future shocks as we head into the new year.

"It is also encouraging that the region's firms report plans to invest in their people to target growth."

Business confidence in the manufacturing sector fell for the fifth month in a row, to 13 per cent, down 1 percentage point, the lowest confidence level since February 2021. Confidence in the retail sector declined by 6 percentage points to 9 per cent, while confidence in the services sector also fell to 16 per cent, both the lowest levels since early 2021.

However, the construction sector saw a 10 percentage point rise to 20 per cent, although this level still remains weaker than in the first half of the year.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: "While business confidence has marginally fallen this month, along with a drop in forward looking economic optimism, it is encouraging to see businesses still looking to increase their headcounts.

"However, cost pressures remain evident as businesses raise prices to protect their margins and wage pressure continues to be impactful. Given the recent turbulence in financial markets, it will be interesting to see how this will affect business confidence."