Business confidence in the South West remains high, falling just one point during the beginning of June, according the latest business barometer from Lloyds Bank.
The banking group recorded that confidence fell to 29%, one point down from 30% in May.
Companies in the South West reported lower confidence in their own business prospects month-on-month, down eight points at 34%. When taken alongside their optimism in the economy, up six points to 23%, this gives a headline confidence reading of 29%.
South West businesses identified their top target areas for growth in the next six months as investing in teams (31%), diversifying into new markets and evolving their product or service offerings (both 29%).
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The business barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
It found a net balance of 13% of businesses in the region expect to increase staff levels over the next year, down 22 points on last month.
Amanda Dorel, regional director for the South West at Lloyds Bank Commercial Banking, said: “Confidence levels among the regions businesses remains strong and it's really encouraging to see firms optimistic in the UK’s wider economic outlook. Of course, there are still headwinds for firms, particularly with sticky inflation, but there are reasons to be optimistic with some costs starting to fall and a busy summer trading period ahead.
“Hospitality and leisure firms in particular will be hoping for a long summer season of spending. Those who move quickly to attract new employees in an increasingly tight labour market will be poised to take full advantage of increasing levels of trading.”
Overall, UK business confidence increased by nine points to 37% in June, with all regions reporting a positive confidence reading. Eight out of 10 regions reported a higher confidence reading than in May.
The East Midlands reported the highest levels of business confidence at 52% (up 35 points on last month), the highest level of any UK region or nation this year. Scotland reported the second highest confidence reading at 50% (up 28 points month-on-month), followed by the North East at 47% (up 12 points month-on-month) and Yorkshire at 45% (up 26 points month-on-month). London and the South West were the only regions to report a decline in confidence.
Business confidence for firms in the service sector rose to 37% (up 11 points), the highest seen since February 2022. Lloyds credited this to the recent spell of good weather and a reduction in food and energy prices.
Manufacturing firms’ confidence also increased to its highest level since early 2022, rising to 50% (up 10 points) to outperform other sectors.
Hann-Ju Ho, senior economist Lloyds Bank Commercial Banking, said:“It’s encouraging to see business confidence rebounding following last month’s five-point dip to 28%. Trading prospects and optimism have seen a resurgence this month with overall confidence up in all but two of the twelve regions of the UK, which shows positive prospects across the wider economy.
“However, interest rate rises and cost pressures are still felt by many and we await to see the impact of the latest 50 basis point rise in the base rate. Meanwhile, expectations for average pay growth, although down slightly this month, appear to have picked up compared with the start of the year and remain elevated relative to pre-pandemic levels.”
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