Business confidence in the East Midlands fell six points during April to 16%, the lowest of any UK region or nation, 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 19%. When taken alongside their optimism in the economy, down one point to 13%, this gives a headline confidence reading of 16%.
Despite the fall in confidence, East Midlands businesses flagged a range of growth opportunities for the next six months, including evolving their offering with new products or services (38%), investing in their teams (32%) and making the most of new technology (23%).
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 19% of businesses in the region expect to increase staff levels over the next year, up six points on last month.
Overall UK business confidence remained unchanged during April, at 33%. Firms’ outlook on their future trading prospects rose five points to 39%, but their optimism in the economy dipped slightly on March (down from 32% to 26%). The net balance of businesses planning to create new jobs also decreased by six points to 26%.
Every UK region and nation reported positive confidence readings in April. Wales (up 25 points to 20%), the South East (up 19 points to 30%) and the West Midlands (up 10 points to 42%) reported the largest increases month-on-month, with the West Midlands now the most optimistic region overall.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “While it is disappointing to see this fall in confidence, it certainly isn’t all doom and gloom. There is still a positive reading overall, with many firms seeing opportunities to grow or expand their teams this year.
“There are exciting plans afoot in the region too, including a new ‘Gigafactory’ in Leicester that will potentially kick off next year, which will no doubt bring a boost to businesses across the supply chain. We’ll be sure to play our part in helping firms to navigate the current challenges they are facing so they can continue to target growth in future.”
From a sector perspective, manufacturing confidence increased by eight points to 43%, erasing part of the 19-point decline in March, helped by somewhat stronger trading prospects.
Retail and services confidence, however, were little changed on the month and is weaker than at the start of the year, with businesses increasingly concerned about the outlook for the wider economy. Retail confidence edged up one point to 29%, while services confidence was unchanged at 32%. Construction confidence fell for a second month to 33%, but is still on a par with the all-sector average.
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “April’s data is mixed and follows the significant decline in business confidence in March after Russia’s invasion of Ukraine. Although firms reported a partial recovery in their trading prospects, optimism for the wider economy declined for a second successive month.
“Positives remain as overall confidence is above the long-term average, but it is still expected that growth will moderate over the coming months and many businesses will remain cautious as they face into these headwinds.”
