Business confidence in the East Midlands rose eight points during September to 33%, making it one of only three regions to report an incline in confidence 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 14 points at 38%. When taken alongside their optimism in the economy, up one point to 28%, this gives a headline confidence reading of 33%.
East Midlands businesses identified their top target areas for growth in the next six months as investing in their teams 41%, evolving their offer 40% and investing in new technology 40%. The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. A net balance of 5% of businesses in the region expect to increase staff levels over the next year, down 22 points on last month.
Overall UK business confidence fell five points in September from 41% to 36%. Firms’ outlook on their own trading prospects remained strong at 41% despite a five-point drop on last month, and their optimism in the UK economy also remained robust at 30%, down by seven points on August’s reading.
Businesses’ hiring intentions remained upbeat with 26% of firms reporting plans to increase their staff levels over the next year, down five points on last month.
Companies in London reported the highest levels of business confidence for the second consecutive month at 44% (down eight points month-on-month). Firms in Yorkshire reported the second highest reading at 40% (up eight points month-on-month), followed by those in the North West at 38% (up four points month on month).
The fall in business confidence this month centred around the retail and services sectors, following strong sentiment in August. Retail confidence fell to 32% (down 12 points) dragged down in particular by trading prospects, while services confidence declined to 36% (down eight points). Construction confidence also fell to 36% (down eight points). However, manufacturing was stronger, with confidence rising to a three month high of 36% (up six points).
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “It’s fantastic to see that overall business confidence in the East Midlands has risen, it’s a testament to the region’s resilience given it’s one of just three UK regions to see an increase in confidence as we head into the colder months.
“While hiring and staff retention remains a challenge for businesses far and wide, it’s encouraging that the region’s firms still plan to recruit and invest in their people. When it comes to making the most of wider growth opportunities, keeping a keen eye on working capital will be key, and we’ll remain by their side to provide the support they need to boost their potential.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “While the gains in business confidence we saw in August have not been maintained, it’s important to see the wider trend clearly reflected in the data which paints a very different picture to this time 12 months ago, when the economy was in significant difficulties.
“Despite some month-to-month movements, 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 now an average of 27% in the third.
“Although the economic environment remains uncertain with inflation and interest rate pressures playing their part, the recent decision by the Bank of England to leave interest rates unchanged is likely to help businesses feel more upbeat about the future, which may underpin confidence in the last three months of the year.”
