Business confidence in the East Midlands fell one point during August to 11%, 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 11 points at 4%. When taken alongside their optimism in the economy, down 6 points to 2%, this gives a headline confidence reading of 11%.
East Midlands businesses identified their top target areas for growth in the next six months as evolving their offering (34%), investing in their teams (22%) and diversifying into new markets (21%).The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.A net balance of a third (33%) of East Midlands businesses expect to increase staff levels over the next year, up 20 points on last month.Overall UK business confidence fell nine points during August to 16%, its lowest level since March 2021. Firms’ outlook on their future trading prospects was down 32 points to 5%, and their optimism in the wider economy dropped six points to 6%. The net balance of businesses planning to create new jobs also decreased five points to 16%.While every UK region and nation reported a positive confidence reading in August (except the South East, where confidence dropped 15 points to 0%), only three recorded a month-on-month increase in optimism. The three regions were the North West (up 26 points to 44%), South West (up 12 points to 23%) and Yorkshire (up nine points to 23%), with the North West now the most optimistic region overall.Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “It’s encouraging to see confidence among East Midlands firms remain steady, despite the multitude of economic headwinds they continue to face.
“In order to remain resilient, it’s crucial that they keep a close eye on working capital and make themselves aware, if they’re not already, of the many funding options available to ensure fluctuating demand doesn’t have a damaging impact on their cash flow.“We’ll be firmly by the side of businesses across the region to help them navigate the challenges that lie ahead.”
Business confidence declined across all four of sectors in August. Confidence within the retail sector declined the most this month (13%, down 18 points), with the service sector also seeing a significant nine-point decrease (15%). Other sectors saw moderate decreases, with manufacturing down by four points (16%) and construction (26%, a fall of two points), in line with recent trends.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence declined for a third consecutive month as firms continue to face economic challenges in the period ahead and as inflation concerns intensify. Despite edging lower this month, the outlook for both wage and price pressures remains elevated. However, there are some brighter points as the demand for staff remains positive, and firms reported lower concerns about staffing issues and the pandemic.”
