Business confidence in the North West fell 30 points to 14% in September, according to the latest Business Barometer from Lloyds Bank Commercial Banking – conducted between 1st-15th September, before the Chancellor’s economic announcement.
Companies in the region reported lower confidence in their own business prospects month-on-month, down 24 points to 31%. When taken alongside their optimism in the economy, down 36 points to -3%, this gives a headline confidence reading of 14%.
Despite the fall in optimism during September, the strong three-month average of local businesses’ confidence scores reveals a positive picture. The average sits at a net confidence score of 25%, factoring in monthly scores of July, August and September.
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
North West businesses identified their top target areas for growth in the next six months as evolving their product or service offering (43%), diversifying into new markets (27%) and investing in technology (26%). A net balance of 14% of businesses in the region expect to increase staff levels over the next year, down 29 points on last month.
Overall UK business confidence stayed the same as in August during September at 16%. Despite the net balance of businesses planning to create new jobs increasing by one point to 17%, firms’ outlook on their future trading prospects dropped one point to 25%, and their optimism in the wider economy also fell by one point to 5%.
Three UK regions and nations recorded a month-on-month increase in optimism in September. London (up 12 points to 33%), the South East (up 15 points to 15%) and Scotland (up 10 points to 15%) all reported higher confidence readings with London now the most optimistic region overall. Only Wales (down five points to -4%) recorded a negative overall confidence reading in the last month.
Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “The economic landscape is continuing to impact businesses far and wide, and firms here in the North West are no different. But despite the many challenges being thrown at them, it’s encouraging to see that they remain firmly focused on finding new ways to grow, reaching new customers, and consolidating their market position.
“It may be some time before the current pressures begin to ease. Managing cash flow during this period will be vital, and there are tools available to help – such as invoice discounting and asset-based lending – as firms to continue on the path to growth.”
Business confidence rose by two points in both the retail and service sectors (15% and 17% respectively), however both these figures are close to 12-month lows. Manufacturing and construction firms saw their lowest levels of business confidence this year, down two points in manufacturing to 14% and down 16 points to 10% in construction. This was driven by overall falling optimism in the economy.
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “It is encouraging to see business confidence stabilising after a three-month decline. Firms’ assessment of their own trading prospects also remained steady and continues to show some resilience during turbulent times. Yet, cost pressures remain, as more businesses look to raise prices to help protect their margins while wage pressures show little sign of abating at this stage. With the recent volatility in financial markets as well as the Government’s Growth Plan and energy cap announcements, it will be interesting to see how these measures affect business confidence.”
