As Business confidence fell in six of the UK’s twelve regions and nations, the East Midlands has managed to hold steady reveals a new report.
The Business Barometer from Lloyds Bank Commercial Banking reveals that firms’ expectations for wage growth eased back this month, with the proportion expecting 3% or more for their staff in the next twelve months falling to 26% from 29%. Nevertheless, pay growth expectations remain high relative to pre-Covid outcomes and suggest that difficulties persist in finding the right staff to fill vacancies.
Hiring intentions rose for the first time in five months. Firms’ expectations regarding their staffing levels for the year ahead improved for the first time in five months. Nevertheless, with the net balance trending lower in recent months, it still points to slower employment growth ahead for the economy. Forty-two percent (up from 39%) anticipate a higher headcount and 21% (down from 23%) forecast a smaller workforce. The resulting net balance rose to 21%, from 16%, a three- month high but still lower than the first half of the year.
Business confidence in the manufacturing sector across the UK fell for a fifth straight month, down 1 point to 13%, the lowest since February 2021. Weaker confidence was also evident among firms in retail and services. Confidence in the retail sector declined 6 points to 9%, while services confidence edged down 1 point to 16%, both the lowest since early 2021. Construction confidence moved up 10 points to 20%, but it remains weaker than in the first half of the year.
London, the North West and the West Midlands were the most upbeat regions, with confidence above the UK average and rising by between 8 and 16 points, while the East of England and Wales also recorded stronger confidence, albeit from a lower base.
Commenting on the figures, Hann-Ju Ho, Economics & Market Insights for Lloyds Bank Corporate & Institutional Banking says: “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 continue to be impactful.”
Paul Gordon, MD for SME and Mid Corporates for Lloyds Bank Business & Commercial Banking adds: “While confidence has marginally decreased this month, this also comes at a time of great economic uncertainty. The fact that it has only fallen by 1% suggests that businesses are showing resilience. As we head into the winter months and pricepressures continue, energy price increases will start to bite and we are seeing continued pressure on pay expectations…”
