Business confidence in the East Midlands fell nine points during November to 29%, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1st-15th November, before the Chancellor’s Autumn Statement announcement on Wednesday 22nd November.
Companies in the region reported lower confidence in their own business prospects month-on-month, down one point at 38%. When taken alongside their optimism in the economy, down 15 points to 21%, this gives a headline confidence reading of 29%.
East Midlands businesses identified their top target areas for growth in the next six months as introducing new technology (35%), evolving their offer (33%) and investing in their team (30%). The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. A net balance of 30% of businesses in the region expect to increase staff levels over the next year, up one point on last month.
Overall UK business confidence rose three points in November from 39% to 42%, the third consecutive monthly increase, while firms’ outlook on the overall UK economy increased four points to 38%. Businesses’ optimism in their own trading prospects also continued the upward trend for the second consecutive month, rising three points to 48%.
Companies’ hiring intentions reached their highest level since May 2022, with 35% of firms intending to increase staff levels over the next 12 months, up three points month-on-month.
Firms in London reported the highest level of business confidence, jumping nine points to 56%, followed by the North West (54%), Yorkshire and the Humber (50%) and the North East (48%). Companies in the North West reported the biggest uptick in business confidence, increasing 20 points month-on-month to 54%.
Firms in the services industry reported an increase in confidence to 46% (up three points), the highest level for over two years (since September 2021), reflecting broad-based optimism in the sector. Retail confidence also rose for a second month to 42% (up five points), while sentiment among manufacturing firms reached a five-month high of 45% (up nine points) in contrast with recent shortfalls. Construction firms’ confidence improved for the first time in three months to 35% (up four points), but this still lags other sectors.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “While confidence in the East Midlands has fallen this month, it’s good to see businesses’ optimism around their own prospects remain strong. It’s also pleasing to see that firms plan to invest in growth, with many seeing opportunities for expansion by investing in new technology.
“Firms that explore new technology, such as AI and automation, can see huge benefits such as reduced costs and boosted profits. We will be by the side of local companies to counsel on the technologies which can have the greatest impact for their specific business, and provide the funding needed to realise these opportunities.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise.
“It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter.
“Our next survey in December will reveal how firms are digesting the measures announced in the Chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”
