Business confidence in the East Midlands rose 16 points during December to 28%, the region’s highest reading since February, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported higher confidence in their own business prospects month-on-month, up nine points at 28%. When taken alongside their optimism in the economy, up 24 points to 29%, this gives a headline confidence reading of 28%.
East Midlands businesses identified their top target areas for growth in the next six months as investing in their teams (35%), evolving their offering (28%) and introducing new technology (26%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.A net balance of more than a third of East Midlands businesses (37%) expect to increase staff levels over the next year, up 15 points on last month, and the highest levels of any UK nation or region.
Overall UK business confidence rose seven points during December to 17%. The proportion of businesses that felt positive about the wider economy was up 10 points month-on-month to 8%, while their outlook on their own future trading prospects increased by two points to 27%. Businesses also remained optimistic about job creation, with 16% of firms planning to hire more staff in the next 12 months – up two points on November.All UK regions and nations reported a positive confidence reading in December, for the first time since July, with eight out of 11 recording a month-on-month increase in confidence. Of those, the North West (up 31 points to 40%), North East (up 24 points to 34%) and South East (up 23 points to 14%) saw the largest monthly increases, with the North West now the most optimistic overall.Dave Atkinson, regional director for East Midlands at Lloyds Bank Commercial Banking, said: “It’s fantastic to see East Midlands businesses ending what has been a challenging year for many on a high. While economic headwinds have caused confidence to waver in recent months, there is cautious optimism about the economy among businesses as we embark on 2023.“Given the region’s strength in fashion, design and manufacturing, many of its retailers will be hoping for prolonged consumer demand throughout the January sales. Busy trading periods like this can also put a strain on firms, and companies must try to maintain financial flexibility to capitalise on spikes in demand.”
The manufacturing sector reversed a six-month trend of falling confidence, with a nine-point rise to 13%. Confidence in construction and services also increased by nine points to 29% and 18% respectively. However, retail confidence fell slightly, by two points to 13%.
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Business confidence has received a boost in the run up to Christmas as firms anticipate a better festive trading period than last year.
“While firms report being hopeful for a more successful 2023, inflation and the risk of an economic downturn remain the biggest concerns for businesses, with rising costs evidenced by the number of firms expecting to raise prices.
“Wage growth is expected to remain high for now as retaining existing staff and attracting new talent will continue to be priorities for many businesses going into next year.”
