Business confidence in the East Midlands rose 18 points during April to 41%, 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 ten points at 46%. When taken alongside their optimism in the economy, up 27 points to 36%, this gives a headline confidence reading of 41%.
East Midlands businesses identified their top target areas for growth in the next six months as evolving their offer (42%), diversifying into new markets (42%) and introducing new technology (39%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.A net balance of 28% of businesses in the region expect to increase staff levels over the next year, down five points on last month.
Overall, UK business confidence climbed one point to 33% in April. Every UK nation and region reported a positive confidence reading and six out of 11 regions recorded a higher reading than last month. London reported the highest levels of business confidence at 47% (up nine points month-on-month), followed by East Midlands (up 18 points) and North East (up three points), both at 41%.
Firms’ outlook on their own trading prospects remained strong at 39% for the second consecutive month, and a net balance of 27% of businesses reported plans to increase their staff levels, up two points from March.
Ahead of the three Bank Holidays in May, firms’ optimism in the overall economy increased five points to 28% – the highest reading since June last year.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “It’s fantastic to see the region’s businesses mark a third consecutive month of rising confidence, and to see so many firms planning to invest in new technology and explore new markets. Investments in these areas will contribute to driving growth and help give businesses the edge they need to differentiate themselves.
“For those businesses focused on growth, reviewing working capital needs, and unlocking finances tied up in inventory or stock with asset or invoice finance, can be helpful for freeing up money to invest back into the business.”
Business confidence in the service sector rose to 36% this month, the highest since May 2022, with sentiment particularly upbeat in hospitality and financial services. While the other sectors saw slight decreases, construction remained strong at 43% while manufacturing and retail remain above last year’s lowest levels.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum.
“The revival in the demand for labour, which improved for the fifth consecutive month, may account for the modest uptick in wage expectations for the next twelve months.
“While firms’ concerns on overall cost pressures have eased, there is little evidence that pricing expectations have declined which may impact wider pricing decisions for the remainder of 2023.”
