Bank of Scotland Business Barometer
- Business confidence in Scotland rose 15 points during November to 41%
- Companies in Scotland reported higher confidence in their own business prospects month-on-month, up seven points at 51%
- Overall UK business confidence increased three points in November to 42% with firms’ outlook on the economy also up by four points at 38%
Business confidence in Scotland rose 15 points during November to 41%, according to the latest Business Barometer from Bank of Scotland Commercial Banking – conducted between 1st-15th November, before the Chancellor’s Autumn Statement announcement on Wednesday 22nd November.
Companies in Scotland reported higher confidence in their own business prospects month-on-month, up seven points at 51%. When taken alongside their optimism in the economy, up 22 points to 32%, this gives a headline confidence reading of 41%.
Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (37%), investing in sustainability (30%), and introducing new technology (29%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 25% of businesses in the region expect to increase staff levels over the next year, down eight points on last month.
National picture
Overall UK business confidence rose three points in November from 39% to 42%, the third consecutive monthly increase, while firms’ outlook on the overall UK economy increased four points to 38%.
Businesses’ optimism in their own trading prospects also continued the upward trend for the second consecutive month, rising three points to 48%.
Companies’ hiring intentions reached their highest level since May 2022, with 35% of firms intending to increase staff levels over the next 12 months, up three points month-on-month.
Firms in London reported the highest level of business confidence, jumping nine points to 56% followed by the North West (54%), Yorkshire and the Humber (50%) and the North East (48%). Companies in the North West reported the biggest uptick in business confidence, increasing 20 points month-on-month to 54%.
Firms in the services industry reported an increase in confidence to 46% (up three points), the highest level for over two years (since September 2021), reflecting broad-based optimism in the sector. Retail confidence also rose for a second month to 42% (up five points), while sentiment among manufacturing firms reached a five-month high of 45% (up nine points) in contrast with recent shortfalls.
Construction firms’ confidence improved for the first time in three months to 35% (up four points), but this still lags other sectors.
Martyn Kendrick, regional director for Scotland at Bank of Scotland Commercial Banking, said: “After a dip in October, it’s good to see businesses feeling more confident in their prospects for the coming months.
“With the festive season almost here and Christmas markets in cities including Edinburgh and Aberdeen now in full swing, those in the hospitality and leisure industries will be preparing for an influx of trade.
“For many firms this means taking on more staff to manage the increase in demand. They also need to ensure their working capital is in healthy shape, so they are ready to capitalise on the opportunities ahead. We’ll be by the side of businesses to support them through the festive period and beyond.”
Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “Last month showed strong performance across a number of sectors, with the services industry showing material gains as confidence reached the highest level since September 2021.
“We’ve also seen a real turnaround in sentiment for manufacturers, with business confidence at a five-month high, reflecting the expectation among many firms that interest rates have now peaked and may begin to fall next year.
“Retail confidence continued to climb, up five points to 42% and with consumer confidence showing a sharp rise in a recent key tracker, businesses are certainly hopeful for the future.
“However, recent increases in energy costs and rising oil prices will undoubtedly have an impact on consumers and businesses alike. If businesses can look to their future financial stability now and ensure cash-flow remains a priority, that should put them in good stead for the months ahead.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence rising to a 21-month high shows the resilience of UK companies, as both trading prospects and economic optimism continue to rise.
“It’s encouraging to see signs that wage expectations may be stabilising, even against the backdrop of hiring intentions increasing to an 18-month high. Price indicators in the survey are similarly up, with our data continuing to show that firms are still safeguarding their profit margins in response to past rises in interest rates, wage increase pressures, and the prospect of higher energy prices again this winter.
“Our next survey in December will reveal how firms are digesting the measures announced in the Chancellor’s Autumn Statement last week as they navigate the busy festive season and make plans for 2024.”
24
0
20
