Business confidence in the East Midlands fell 18 points during January to 10%, 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 four points at 24%. When taken alongside their optimism in the economy, down 31 points to -2% this gives a headline confidence reading of 10%.
East Midlands businesses identified their top target areas for growth in the next six months as diversifying into new markets (33%), evolving their product and service offering (31%) and investing in their team (29%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.Businesses in the region expect staff levels to remain the same over the next year. This is up from December when a net balance of 37% of businesses reported plans to make new hires.
Overall UK business confidence climbed in January, with firms reporting their highest confidence levels since July last year.
Business confidence increased by five points to 22% and the net balance of businesses feeling optimistic about the economy doubled on December’s reading to 16%.
Ahead of National Apprenticeship Week (6-12 February) 30% of businesses across the UK reported that they are looking at opportunities to grow by investing in staff development and training. A net balance of 17% of firms reported plans to create new jobs in the next twelve months.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “Despite a challenging business environment, it’s pleasing to see that the region’s firms are feeling upbeat and are focused on investing in skills to help set them up for growth.
“Upskilling forms a key part of the recently agreed East Midlands Devolution Deal, which contains a fully devolved adult education budget, tailored to match the skills need of local businesses. For firms in the region making the most of these education opportunities and investing in training will reap rewards and will build a platform for the region’s growth for years to come.”
For the second month in a row, confidence in the manufacturing and service sectors increased, with manufacturing rising to 28% (up 15 points) and services up to 25% (up seven points). Business confidence in construction was down two points to 27%, while retail confidence fell for the second month in a row to 7% (from 13%), the lowest level since February 2021.
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing.
“It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower.”
