Business confidence in Wales was at its highest level in two years as firms started the new year with a degree of optimism. Latest figures from the Lloyds Bank's Business Barometer for January 2023 saw Welsh business confidence rise by 16 points to 34%, the highest reading since 2021.
Welsh firms were more upbeat in their own business prospects month-on-month, up 12 points at 43%. Taken alongside their optimism in the economy (up 20 points to 26%) this gave a headline confidence reading of 34%.
Welsh businesses identified their top target areas for growth in the next six months as evolving their offer (42%), investing in their team (39%), and diversifying into new markets (29%). A net balance of 29% of Welsh firms expect to increase staff levels over the next year, up 34 points on last month.
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The survey was conducted between the 3rd and 17th January 2023 and provides early signals about UK economic trends, regionally and nationwide.
Overall UK business confidence reached a six-month high at 22%, with twice as many businesses optimistic about the economy than they were in December (16%). Some 30% of businesses in the UK said that they were looking at investing in staff development and training as part of growth strategies. A net balance of 17% of firms reported plans to create new jobs in the next twelve months.
Confidence in the manufacturing and service sectors increased for the second month in a row. Manufacturing rose to 28% (up 15 points) while services reached 25% (up seven points). However, the construction sector was down two points to 27% and confidence among retailers fell for the second month in a row to 7% (from 13%), the lowest level since February 2021.
Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said: "The past few years have been incredibly challenging for Welsh businesses so it’s encouraging to see that firms across the country are feeling confident in their own trading prospects as we kick off the new year. It’s also great to see so many committed to investing in their people through training and development over the next few months.
“We’ll continue to stand side-by-side with Welsh businesses and support them as they build back and focus on their growth ambitions.”
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said: "Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing. It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower.”
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