Business confidence in the East Midlands fell 11 points during July to 12%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported lower confidence in their own business prospects month-on-month, down 12 points at 15%. When taken alongside their optimism in the economy, down 11 points to 8%, this gives a headline confidence reading of 12%.
East Midlands businesses identified their top target areas for growth in the next six months as evolving their offering with new products or services (46%), hiring new employees and investing in the development of their existing teams (39%) and diversifying into new markets (34%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 13% of businesses in the region expect to increase staff levels over the next year, down three points on last month.
Overall UK business confidence fell three points during July to 25%. Firms’ outlook on their future trading prospects was up three points to 37%, but their optimism in the wider economy dropped nine points to 12%. The net balance of businesses planning to create new jobs also decreased, seven points to 21%.
Every UK region and nation reported a positive confidence reading in July, with four out of 11 recording a higher reading than last month. The East of England (up 15 points to 46%), West Midlands (up eight points to 38%) and Wales (up seven points to 30%) saw the biggest increases month-on-month, with the East of England now the most optimistic region overall.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “The region’s businesses are clearly feeling the heat from the ongoing challenges around rising costs, supply chain disruption and skills shortages. Despite this, it’s encouraging to see overall confidence among firms remain in positive territory, the latest sign of their resilience against the backdrop of uncertain trading conditions.
“In times like this, it’s more important than ever for businesses to keep a close eye on their working capital and to plan for any potential pinch points on the road ahead. We’ll be by their side to offer the necessary financial guidance and support to help them do this.”
Business confidence declined across all four of the sectors in July, reflecting lower optimism about the economy. Confidence within manufacturing declined the most this month (20%/-12), with firms citing moderating trading prospects and a notable drop in economic optimism, but also issues with inflation and supply bottlenecks. There were small falls in confidence for construction (28%/-2), retail (25%/-6) and services (24%/-1).
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence declined this month, suggesting that economic headwinds are becoming more forceful. Despite this, firms’ assessment of their own trading prospects showed some resilience in the face of a challenging environment. Meanwhile, price pressures have shown no clear signs of a downward trend and there appears little sign yet that wage pressures are abating.”
