Business confidence in the East Midlands fell 24 points during May to 17%, 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 31 points at 15%. When taken alongside their optimism in the economy, down 18 points to 18% this gives a headline confidence reading of 17%.
East Midlands businesses identified their top target areas for growth in the next six months as investing in their team (37%), devolving their offer (28%) and entering new markets (28%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 10% of businesses in the region expect to increase staff levels over the next year, down 18 points on last month.
Overall UK business confidence dropped five points to 28% in May. Despite the dip, every UK nation and region report a positive confidence reading.
As the country celebrated the Coronation, London reported the highest levels of business confidence at 43% (down four points on last month), followed by the North East at 35% (down six points month-on-month). The West Midlands, South East and South West, also reported high readings in May, all at 30%.
Firms remain optimistic about their own trading prospects, with a net balance of 34% expecting business activity to increase over the next 12 months, down just five points on last month.
Dave Atkinson, regional director for the East Midlands at Lloyds Bank Commercial Banking, said: “Business confidence in the East Midlands has dipped this month, following a similar trend seen across the other regions of the UK. However, confidence remains firmly in the positive territory and businesses continue to plan investments in their teams to drive growth.
“We will remain by the side of the region’s firms, to help them fund training opportunities and bring in the skills they need to deliver on their ambitions.”
Confidence among manufacturers increased to a one-year high of 40% (up from 29%), while retail registered a more modest two point rise to 26%, and construction remained robust at 34% despite its monthly nine point decline. Services confidence, however, fell back to 26% from 36%, almost erasing last month’s rise. Overall, confidence across the broad sectors remains above levels at the start of the year.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “As the economic environment remains challenging, compounded by stubborn inflation and higher wage pressures, business confidence has dipped slightly this month as firms feel cautious about the wider economy and their own trading prospects.
“However, while firms’ trading prospects and economic optimism both eased back, they still remain in positive territory as the UK has avoided an outright contraction in GDP – indicating a certain amount of underlying resilience in the economy.”
