Business confidence in Wales is the lowest of any region or nation the UK, a new survey finds.
The latest Business Barometer from Lloyds Bank Commercial Banking found that trading confidence among Welsh firms fell to new lows last month amid the continued difficult economic outlook and cost of doing
It found that Wales recorded a negative confidence reading last month of -4% - the lowest recording of any UK nation or region and the only nation to record a negative confidence reading in September.
This was down five points from August when business confidence had dropped to 1%.
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The Business Barometer, which questions 1,200 business monthly including 100 businesses in Wales, provides early signals about UK economic trends both regionally and nationwide.
The survey was conducted between 1 - 15 September before the Chancellor's 'mini-budget' fiscal announcement.
Despite the fall in optimism in August, the three-month average score of local business confidence across June, July and August, showed a more positive picture at 9%.
Welsh firms also reported higher confidence in their own business prospects month-on-month, up 16 points at 18%. When taken alongside their optimism in the economy, down 29 points to -27%, this gave a headline confidence reading of -4%.
On top target areas for growth over the next six months, Welsh firms identified evolving their offering (33%), investing in their teams (29%), and investing in sustainability (28%).
While, a net balance of 4% of Welsh businesses expect to reduce staff levels over the next year, up one point on last month.
Overall UK business confidence during September remained at 16% - the same as in August.
The net balance of businesses planning to create new jobs increasing by one point to 17%. However, firms’ outlook on their future trading prospects dropped one point to 25%, and their optimism in the wider economy also fell by one point to 5%.
Three UK regions and nations recorded a month-on-month increase in optimism in September.
London (up 12 points to 33%), the South East (up 15 points to 15%) and Scotland (up 10 points to 15%) all reported higher confidence readings with London now the most optimistic region overall. Only Wales (down five points to -4%) recorded a negative overall confidence reading in the last month.
Across the sectors, business confidence rose by two points in both retail and service sectors (15% and 17% respectively), however both these figures are close to 12-month lows.
Manufacturing and construction firms saw their lowest levels of business confidence this year, down two points in manufacturing to 14% and down 16 points to 10% in construction. This was driven by overall falling optimism in the economy.
Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said: "Welsh businesses are clearly feeling the effects of the considerable economic headwinds and challenging trading conditions they are currently facing. The country’s renowned tourism and leisure sector, in particular, is facing pressure as consumers cut back on unnecessary spending to save money.
"However, it’s encouraging to see that more than a quarter of firms have identified investing in sustainability as a focus growth area. At Lloyds Bank, we offer specific finance for these types of investments through our Clean Growth Financing Initiative, which provides discounts on our normal commercial lending as an incentive to help Welsh businesses make the most of the sustainable opportunities available."
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “It is encouraging to see business confidence stabilising after a three-month decline. Firms’ assessment of their own trading prospects also remained steady and continues to show some resilience during turbulent times. Yet, cost pressures remain, as more businesses look to raise prices to help protect their margins while wage pressures show little sign of abating at this stage. With the recent volatility in financial markets as well as the Government’s Growth Plan and energy cap announcements, it will be interesting to see how these measures affect business confidence.”
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