Business confidence in the South West has reached its highest levels this year according the latest business barometer from Lloyds Bank.
Companies in the South West reported higher confidence in their own business prospects month-on-month (compared with March), up 14 points at 43%. When taking alongside their optimism in the economy, up 20 points to 28%, this gives a headline confidence of 36%.
South West businesses identified their top target areas for growth in the next six months as investing in their teams (46%), evolving product or service offerings (39%), and diversifying into new markets (33%). A net balance of 32% of businesses in the region expect staff levels to increase over the next year, up 14 points on last month.
Overall, UK business confidence climbed one point to 33% in April. Every UK nation and region reported a positive confidence reading and six out of 11 regions recorded a higher reading than last month. London reported the highest levels of business confidence at 47% (up nine points month-on-month), followed by East Midlands (up 18 points) and North East (up three points), both at 41%.
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Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: “Confidence amongst the region's businesses is at its highest level for some time, and there is good reason for optimism as we look ahead to the summer months.
“As temperatures begin to rise, the region’s tourism and hospitality businesses will be hoping for an extended period of strong trade, especially as consumers take advantage of May’s three bank holidays. Making the most of these opportunities is key, and those who keep a close eye on their working capital will be best placed to take advantage of any increases in trade.”
Ahead of the three Bank Holidays in May, firms' optimism in the overall economy increased five points to 28% - the highest reading since June last year.
Business confidence in the service sector rose to 36% this month, the highest since May 2022, with sentiment particularly upbeat in hospitality and financial services. While the other sectors saw slight decreases, construction remained strong at 43% while manufacturing and retail remain above last year’s lowest levels.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum. The revival in the demand for labour, which improved for the fifth consecutive month, may account for the modest uptick in wage expectations for the next twelve months.
“While firms’ concerns on overall cost pressures have eased, there is little evidence that pricing expectations have declined which may impact wider pricing decisions for the remainder of 2023.”
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
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