Member Article

North West businesses optimistic on trading prospects despite economy concerns

Business confidence in the North West fell eight points during August to minus five per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

North West businesses’ confidence in their own trading prospects held steady at three per cent. Together with their views on the economy, this gives an overall confidence of minus five per cent.

Firms’ hiring intentions showed that a net balance of two per cent of businesses in the region expect to decrease staff levels during the next year, down four points on last month.

Across the UK, overall confidence slipped to one per cent, as businesses became less optimistic towards the economic outlook, while confidence in their own prospects fell to eight per cent.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.

Martyn Kendrick, regional director for the North West at Lloyds Bank Commercial Banking, said: “Economic headwinds are clearly effecting North West businesses’ outlook. However, it’s encouraging to see that firms overall are still expecting business activity to increase.

“Managing cashflow and working capital carefully are always important, but they will be especially so for businesses if they anticipate facing tougher trading conditions in the months ahead.

“We’ve pledged £1.4 billion of lending to North West firms in 2019 and we’ll be by the side of our region’s businesses whatever challenges or opportunities they face.”

Across the region, a net balance of 18 per cent of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, down two points on a month ago, but in line with the national average.

UK overview

Businesses in the West Midlands showed the most confidence, at 15 per cent, ahead of the South West (11 per cent) and London (seven per cent).

Those in Scotland were the least confident, with an overall confidence of minus nine per cent, 10 points below the national average.

In August, business confidence in the construction sector rose by six points to 12 per cent. Meanwhile, overall confidence fell by 16 points to three per cent in the manufacturing sector, and by 11 points to six per cent in retail, the lowest levels seen for those sectors this year.

Confidence was also down 15 points to minus three per cent in the services sector, bringing it near to the February low of minus four per cent.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “We have seen a dip in overall business confidence this month, with firms appearing less positive about their own trading prospects and the broader economy, and remaining low against the historic average.

“While ongoing economic uncertainty is likely a key driver, it’s worth noting that companies’ assessment of the expected impact on their business of the UK leaving the EU has remained broadly unchanged this year.”

This was posted in Bdaily's Members' News section by James Stewart .