Business confidence in the East Midlands rose eight points during February to 18%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported higher confidence in their own business prospects month-on-month, up two points at 26%. When taken alongside their optimism in the economy, up 11 points to 9%, this gives a headline confidence reading of 18%.
East Midlands businesses identified their top target areas for growth in the next six months as evolving their offer (41%), diversifying into new markets (28%) and investing in sustainability (26%).The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.A net balance of 14% of businesses in the region expect to increase staff levels over the next year, up 14 points on last month.
Overall UK business confidence decreased by just one point to 21% in February. Firms remained positive about their own trading prospects with a net balance of 31% expecting business activity to increase in the coming 12 months.
Firms also reported plans to create new jobs with 20% of businesses intending to make new hires over the next 12 months – up three points from January.
All UK regions and nations reported a positive confidence reading in February, with six areas reporting a month-on-month increase in confidence. Of those, the West Midlands (up 30 points to 48%) and Yorkshire and Humber (up 22 points to 34%) saw the largest monthly increases.Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “It’s pleasing to see confidence in the East Midlands increase this month. January tends to be quieter for businesses but firms in the region are clearly buoyed by their trading prospects and are looking to diversify their offering, demonstrating their resilience to more challenging market conditions.
“To help steel against potential future disruption, firms in the region should take a proactive approach to managing their cashflow, ensuring they have corporate cards and overdraft facilities to help with short-term finance needs.”
Retail confidence bounced back, rising for the first time in three months to 21% (up 14 points), led by improvements in both trading prospects and economic optimism. However, business confidence fell in construction (down eight points to 19%) and services (down five points to 20%) although this remains higher than in the latter part of 2022.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence has lost a little momentum this month, following the strong gains seen recently. Firms are feeling more cautious about the wider economy. However, confidence in their own trading prospects continues to strengthen, helped by tentative signs that wage and other cost pressures may be reducing.
“While inflation appears to be tapering, pressures on consumers will need to ease further to help make it a more stable environment for businesses to operate.”
