Business confidence in the South West bounced back in October.

Business confidence in the South West rose 26 points during October to 47%, the highest level so far this year, 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 51%. When taken alongside their optimism in the economy, up 27 points to 43%, this gives a headline confidence reading of 47%.

South West businesses identified their top target areas for growth in the next six months as investing in their teams (49%), evolving their products and services (33%), and introducing new technology (28%).

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

A net balance of 29% of businesses in the region expect to increase staff levels over the next year, up 19 points on last month.

Overall, UK business confidence rose three points in October from 36% to 39%, and firms' outlook on the overall UK economy increased four points to 34%. Businesses' confidence in their own trading prospects also continued the upward trend, rising four points to 45%.

Companies' hiring intentions reached their highest level since May last year, with 32% of firms intending to increase staff levels over the next 12 months, up six points month-on-month.

Firms in Yorkshire reported the highest levels of business confidence, jumping 12 points to 52% - the highest reading for the region since March 2022. Companies in the South West reported the biggest uptick in business confidence, increasing 26 points month-on-month to 47%.

Following a fall in confidence in September, the retail and service industries both saw an increase in business confidence, with retail business confidence increasing by five points to 37% and services rising seven points to 43%.

Levels are still lower than seen in August, however, when retail business confidence was at 44% and services at 42%. Manufacturing confidence was 36%, unchanged from last month when confidence rose to a three-month high. Construction fell for a second month in a row to 31% (down five points).

Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: "It's brilliant to see the region's confidence reaching a record level for 2023, with so many firms expecting trading to increase in the coming months.

"As businesses enter the final quarter of the year, it's important they engage with their customer base early to capitalise on any eager shoppers looking to take advantage of tapering inflation. Those who keep a close eye on margins and manage working capital effectively will enter the Christmas trading period ahead of the pack."

Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: "Business confidence this month reflects a more positive outlook as we head into the important festive period, with trading prospects and economic optimism both at their second highest levels this year.

"The level also underlines the wider upward trend of steadily rising confidence in 2023. If you look at the year in quarterly time periods, confidence has steadily risen from 20% in the first quarter, 26% in the second and in September an average of 27% in the third.

"However, our data shows that firms are still safeguarding their profit margins in response to the possibility of interest rates remaining high, wage increase pressures, and the prospect of higher energy prices again this winter.

"Therefore, businesses will be keeping a keen eye on the forthcoming Autumn Statement and Bank of England policy announcements as they navigate through a challenging economic period ahead."