Business confidence in the North West saw double-digit growth this month, according to the latest Lloyds Bank Business Barometer - but optimism remains low in the retail sector as the cost of living crisis continues to bite.
The latest edition of the monthly survey from Lloyds Bank Commercial Banking shows business confidence rose 12 points in May to 44%, the third highest in the UK behind London and the West Midlands.
The survey showed companies in the region reported higher confidence in their own business prospects month-on-month, up 17 points at 60%. Their optimism in the economy was up seven points to 27%, giving a headline confidence reading of 44%.
Growth opportunities identified by North West businesses included investing in their teams (51%), diversifying into new markets (44%) and evolving their offering (38%).
A net balance of 58% of North West businesses expected to increase staff levels over the next year, up 39 points on last month. That was the biggest rise of any UK region or nation and is higher than the UK figure of 37%.
Overall UK business confidence increased by five points during May to 38%, its highest level since February.
Analysed by sector, , retail confidence fell two points to 27%, still below the all-sector average of 38% in the last three months.
But 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 by four points to 36%.
Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “It’s encouraging to see confidence among North West firms in rude health and plans to create new jobs at record-breaking levels. But it remains a challenging environment for businesses, especially with inflation continuing to soar.
“Whether in survival mode or targeting growth, it’s important for firms to take stock of their business, assess their priorities and ensure they have the working capital they need to achieve their ambitions."
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.”
