Business confidence in the East Midlands rose four points during July to -25%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies reported higher confidence in their own business prospects month-on-month at -21%. When taken alongside their views of the economy overall, this gives a headline confidence reading of -25%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during July, but with the picture improving month-on-month.
Two-thirds (65%) experienced a fall in demand for their products and services, down 12 points on the month before. Meanwhile, 5% experienced an increase in demand, although this was down two points on June.
With the Job Retention Scheme beginning to wind down from August, more than two-fifths (43%) of East Midlands firms surveyed said they didn’t have any workers furloughed.
When asked about social distancing measures, more than half (58%) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although a quarter (25%) said they couldn’t operate fully within the rules.
Of the 56% of businesses reporting disruption to their supply chain during July, 23% expected the situation to improve within three months. No businesses expected it to take more than 12 months to return to normal levels.
Amanda Dorel, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “While only marginal, it’s encouraging to see the slight improvement in business confidence in the East Midlands this month.
“It’s the second consecutive rise in optimism since May’s historic low of -41%. We’re seeing this increase against the backdrop of Leicester’s local lockdown – which created added uncertainty and challenges for businesses region-wide. A rise in confidence under these circumstances is testament to local firms’ resilience.
“We will remain by the side of local businesses, helping them navigate the road to recovery.”
At a national level, UK business confidence increased eight points to -22% during July. The North East was the most confident region at -3% followed by the West Midlands (-7%) and the North West (-15%). Wales and Scotland were the least confident with -31% and -37% respectively.
In July, the retail sector increased 11 points to -12%, manufacturing increased 14 points to -21% and services rose 10 points to -26%. However, construction fell eight points to -22% after last month’s strong increase of 30 percentage points.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “While the results suggest the economy is starting to see some improvement, economic confidence still remains in deep negative territory.
“The Government announcement of the slight easing of social distancing measures has now enabled over half of businesses to reach their capacity and resume their usual activities. However, how businesses will continue to respond to the Job Retention Scheme will be key in the coming months.”