Lloyds Bank’s Business Barometer for May 2022 shows:
- Confidence among East Midlands businesses rose nine points during May to 25%
- Region’s firms identify top growth opportunities as investing in their teams (41%), evolving their offering (27%) and diversifying into new markets (24%)
- Overall UK business confidence rose five points during May to 38%, its highest level since February, with seven out of 11 nations and regions recording a higher reading than April
Business confidence in the East Midlands rose nine points during May to 25%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the East Midlands reported higher confidence in their own business prospects month-on-month, up one point at 20%. When taken alongside their optimism in the economy, up 17 points at 30%, this gives a headline confidence reading of 25%.
The region’s businesses identified a range of growth opportunities for the next six months, including hiring new employees and investing in the development of their teams (41%), evolving their offering with new products or services (27%) and diversifying into new markets (24%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 15% of East Midlands businesses expect to increase staff levels over the next year, down four points on last month.
Overall UK business confidence increased by five points during May to 38% – its highest level since February. Firms’ outlook on their future trading prospects rose three points to 42%, and their optimism in the economy increased seven points to 33%. The net balance of businesses planning to create new jobs also increased by 11 points to 37%.
Every UK region and nation reported positive confidence readings in May. London (up 23 points to 63%), Scotland (up 14 points to 42%) and the North West (up 12 points to 44%) reported the largest increases month-on-month, with London now the most optimistic region overall. The East of England, which experienced a 20-point dip in confidence in the last month, is now the least optimistic overall, at 14%.
Dave Atkinson, regional director for the West Midlands at Lloyds Bank Commercial Banking, said: “With confidence among West Midlands businesses rising for a second consecutive month, it’s clear that, despite the challenging environment, the region’s firms are looking forward with optimism and identifying new opportunities for growth.
“Firms looking to expand their geographical footprint in particular should be getting ahead of the game by looking at the best markets for the products and services they offer, and ensuring they are clued up on how they might need to adjust their operations to succeed. At the same time, all companies should now be taking the opportunity to review how they’re managing their working capital – the amount of money tied-up in the day-to-day operation of their business. Optimising factors such as supplier and customer payment times and stock levels are both steps firms can take now to help ensure they have the cash they need, when they need it, to make the most of future demand.
“Whatever they want to achieve, we will be by the side of businesses across the region to help them realise their growth ambitions.”
From a sector perspective, retail confidence fell two points to 27%, remaining lower than the all-sector average of 38% in the last three months. The confidence level is also the lowest since March 2021 as pressure on household real incomes weigh on spending prospects. In contrast, there was a 21-point rise in construction to 54%, while manufacturing sentiment remained resilient, up two points to 45%. Confidence in the services sector reached a three-month high, increasing 4 points to 36%.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence improved this month and firms in general seem able to rebuild some of their margins through price increases. However, they also report several challenges ahead, including concerns around higher costs and an economic slowdown. More immediately, consumer-facing industries, such as retail, are not feeling the same confidence uplift amid the widespread reports of a squeeze on household incomes.”
