Bank of Scotland business barometer

Scottish business confidence ‘on the up’ ahead of Christmas

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.”

Business confidence in Scotland falls during October

· Business confidence in Scotland falls seven points in October to 26%, but firms remain optimistic in their own trading prospects, at 44%

· Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (37%), introducing new technology (37%) and entering new markets (31%)

· Overall UK business confidence increased three points in October to 39% with firms’ outlook on the economy also up by four points at 34%

Business confidence in Scotland fell seven points during October to 26%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. 

Companies in Scotland reported higher confidence in their own business prospects month-on-month, up five points at 44%. When taken alongside their optimism in the economy, down 19 points to 10%, this gives a headline confidence reading of 26%.  

Scottish businesses identified their top target areas for growth in the next six months as months as evolving their offer (37%), introducing new technology (37%) and entering new markets (31%).

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. 
 
A net balance of 33% of businesses in the region expect to increase staff levels over the next year, up two points on last month. 

National picture

Overall UK business confidence rose three points in October from 36% to 39%, and firms’ outlook on the overall UK economy increased four points to 34%. Businesses’ confidence in their own trading prospects also continued the upward trend, rising four points to 45%.

Companies’ hiring intentions reached their highest level since May last year, with 32% of firms intending to increase staff levels over the next 12 months, up six points month-on-month.

Firms in Yorkshire reported the highest levels of business confidence, jumping 12 points to 52% – the highest reading for the region since March 2022. Companies in the South West reported the biggest uptick in business confidence, increasing 26 points month-on-month to 47%.

Following a fall in confidence in September, the retail and service industries both saw an increase in business confidence, with retail business confidence increasing by five points to 37% and services rising seven points to 43%. Levels are still lower than seen in August, however, when retail business confidence was at 44% and services at 42%.

Manufacturing confidence was 36%, unchanged from last month when confidence rose to a three-month high. Construction fell for a second month in a row to 31% (down five points).

Martyn Kendrick, regional director for Scotland at Bank of Scotland, said: ““Despite the drop in overall business confidence, it’s reassuring to see that firms across the country remain optimistic about their own trading prospects as we head into the final quarter of the year.

“As we approach Christmas, and what’s the busiest trading period of the year for many Scottish firms, those in the retail, hospitality and leisure sectors companies will benefit from maintaining a steady cashflow to remain resilient and be well-placed to seize any opportunities to grow.

“It’s no secret that Christmas can be a frenetic and expensive time for businesses and their customers, so firms need to have a plan in place to manage this, as well as having some money aside to cover unexpected costs.

“We’ll remain by the side of Scottish businesses to help them capitalise on avenues for growth in the final months of the year.”

Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: ““Retail and service sectors have clearly felt reassured this month, after confidence fell in September. While others have commented that consumers may be feeling the strain, our data shows that in terms of their future appetite, it certainly isn’t ‘doom and gloom’ for retailers.

“However, higher 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 this month reflects a more positive outlook as we head into the important festive period, with trading prospects and economic optimism both at their second highest levels this year.

“The level also underlines the wider upward trend of steadily rising confidence in 2023. If you look at the year in quarterly time periods, confidence has steadily risen from 20% in the first quarter, 26% in the second and in September an average of 27% in the third.

“However, our data shows that firms are still safeguarding their profit margins in response to the possibility of interest rates remaining high, wage increase pressures, and the prospect of higher energy prices again this winter.

“Therefore, businesses will be keeping a keen eye on the forthcoming Autumn Statement and Bank of England policy announcements as they navigate through a challenging economic period ahead.”

Scottish business confidence fell in May

Bank of Scotland’s Business Barometer for May 2023 shows:

Business confidence in Scotland fell nine points during May to 22%
Companies in Scotland reported lower confidence in their own business prospects month-on-month, down two points at 30%
Overall UK business confidence remains strong at 28%, down five points on last month

Business confidence in Scotland fell nine points during May to 22%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down two points at 30%. When taken alongside their optimism in the economy, down 20 points to 14%, this gives a headline confidence reading of 22%.

Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (45%), investing in their team (35%) and entering new markets (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 29% of businesses in the region expect to increase staff levels over the next year, down three 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.

Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “Despite a slight drop, business confidence figures remain positive and it’s great to see so many firms planning to invest in their teams. 

“On the ground we’re hearing that more and more companies are setting their sights on new goals in the coming twelve months. Whether going after new markets, or making new hires to help during busier periods, it’s important that businesses ensure their working capital is in rude health.

“Having a keen eye on forecasting and finances can help firms to move swiftly when new opportunities arise. We’ll remain by the side of Scottish businesses to support them and help them to capitalise on growth opportunities this summer.” 

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.

Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking, said: “Although we’ve seen a slight slowdown in hiring activity this month, there is still an overall upward trend in hiring intentions this year, with improvements in labour availability as well.

“While businesses may be feeling less optimistic, it’s still encouraging to see confidence is still in line with the Barometer’s long-term average, consistent with positive growth.

“Wage pressures continue to be at higher levels than before the pandemic, which management teams will be closely monitoring. And with inflationary pressures persisting, businesses need to remain agile to the changing economic environment, while keeping a tight watch on costs and the structure of their finances.”

Hann-Ju Ho, Senior Economist 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.”

Bank of Scotland business barometer: Business confidence in Scotland dips but remains upbeat

Lloyds Bank’s Business Barometer for April 2023 shows:

Business confidence in Scotland fell seven points during April to 31%
Companies in Scotland identified their top areas for growth as investing in their team (55%), entering into new markets (35%) and investing in sustainability (32%).
Overall UK business confidence reaches a 11-month high at 33%, up one point on last month, and optimism in the economy rises to highest level since June 2022 at 28%

Business confidence in Scotland fell seven points during April to 31%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down nine points at 32%. When taken alongside their optimism in the economy, down one point to 34%, this gives a headline confidence reading of 31%.

Scottish businesses identified their top target areas for growth in the next six months as investing in their team (55%), entering into new markets (35%) and investing in sustainability (32%).

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

A net balance of 32% of businesses in the region expect to increase staff levels over the next year, down one point on last month.

Overall, UK business confidence climbed one point to 33% in April. Every UK nation and region reported a positive confidence reading and six out of 11 regions recorded a higher reading than last month. London reported the highest levels of business confidence at 47% (up nine points month-on-month), followed by East Midlands (up 18 points) and North East (up three points), both at 41%.

Firms’ outlook on their own trading prospects remained strong at 39% for the second consecutive month, and a net balance of 27% of businesses are intending to increase their staff levels, up two points on March.

Ahead of the three Bank Holidays in May, firms’ optimism in the overall economy increased five points to 28% – the highest reading since June last year.

Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “Despite a small dip in overall business confidence, firms in Scotland are optimistic and many are planning on investing in their teams as they focus on growth in the coming months.

“And with three bank holidays ahead, the country’s world-famous hospitality and leisure sector will be hoping for a busy trading period as consumers make the most of the extra time off.

“Firms will need to closely manage their working capital to ensure they are ready for these peaks in demand. Doing so will ensure they remain resilient and can take advantage of opportunities that come their way.”

Business confidence in the service sector rose to 36% this month, the highest since May 2022, with sentiment particularly upbeat in hospitality and financial services. While the other sectors saw slight decreases, construction remained strong at 43% while manufacturing and retail remain above last year’s lowest levels.

Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking, said: “It is great to see business confidence continuing to increase, hitting a near one year high.

“Hiring intentions have also shown improvement since the start of the year, now sitting significantly higher than pre-lockdown levels. This is an encouraging sign of investment intent but that could be tempered by wage inflation pressures and a hot employment market.

“Improving confidence levels will help give businesses a boost ahead of the King’s Coronation and as we head towards summer but, with majority of businesses also intending to raise their prices, this may add to existing inflationary pressures. Businesses may need to keep an eye on margins to help meet consumer expectations and we remain by their side to support them.”

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The recent increases in business confidence indicate that the economy entered the second quarter of 2023 with positive momentum.

“The revival in the demand for labour, which improved for the fifth consecutive month, may account for the modest uptick in wage expectations for the next twelve months.

“While firms’ concerns on overall cost pressures have eased, there is little evidence that pricing expectations have declined which may impact wider pricing decisions for the remainder of 2023.”

Business confidence dips for Scottish firms in January

Bank of Scotland Business Barometer for January 2023 shows:

Business confidence in Scotland fell five points during January to 10%
As National Apprenticeship Week approaches 27% of businesses in Scotland say investing in training and development presents the biggest opportunity for growth in the next six months
Overall UK business confidence reaches six-month high at 22% with twice as many businesses optimistic about the economy than in December

Business confidence in Scotland fell five points during January to 10%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 17 points at 8%.  When taken alongside their optimism in the economy, up six points to 12%, this gives a headline confidence reading of 10%. 

Scottish businesses identified their top target areas for growth in the next six months as evolving their product and service offer (42%), investing in sustainability (29%) and investing in their teams (27%).

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

A net balance of 14% of businesses in the region expect to increase staff levels over the next year. This is up from December when a net balance of 11% of businesses reported plans to make new hires.

Overall UK business confidence climbed in January, with firms reporting their highest confidence levels since July last year.

Business confidence increased by five points to 22% and the net balance of businesses feeling optimistic about the economy doubled on December’s reading to 16%.

Ahead of National Apprenticeship Week (6-12th February) 30% of businesses across the UK reported that they are looking at opportunities to grow by investing in staff development and training. A net balance of 17% of firms reported plans to create new jobs in the next twelve months.

Chris Lawrie, area director for Scotland for Bank of Scotland Commercial Banking, said: “Ongoing pressures from wider economic challenges are clearly continuing to impact Scottish businesses, but confidence remains in positive territory and firms’ resilience shines on. 

“Over the next few months as concerns such as rising costs continue, it is important firms keep a close eye on cash flow. Having reserves ready for when challenges hit makes managing turbulent periods easier. We’ll remain by the side of Scottish firms to help them successfully navigate the months and years ahead.”   

For the second month in a row, confidence in the manufacturing and service sectors increased, with manufacturing rising to 28% (up 15 points) and services up to 25% (up seven points).

Business confidence in construction was down two points to 27%, while retail confidence fell for the second month in a row to 7% (from 13%), the lowest level since February 2021.

Paul Gordon, Managing Director for Relationship Management, Lloyds Bank Business & Commercial Banking, said: “After a challenging 2022, it’s heartening to see confidence rising for the second consecutive month.

“This is the first back to back increase since September 2021. There is no doubt that the business environment remains challenging and uncertainty still remains, but this improvement in optimism is very welcome as we start 2023.

“With pay expectations tempering, trade expectations set to improve, and a clearer way forward on energy price support, this may give businesses a bit more certainty and the confidence they need to inspire investment and promote growth.”

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence continues to improve following the December boost. Firms are clearly more optimistic about the wider economy and this is driving the increase, helped by precursory signs that wage and other cost pressures may be easing.

“It is still a tough environment for businesses, with high energy bills remaining a concern during the winter months, but there are grounds for optimism for 2023 if inflation starts to trend lower.”

Scottish business confidence climbs as restrictions ease

Bank of Scotland’s Business Barometer for August 2021 shows:

Scottish business confidence rises six points in August to 34%

Firms’ hiring intentions jump 13 points with 34% planning to create jobs in the next 12 months
Overall UK business confidence reaches 36% – the highest reading since May 2018 – as all regions and nations report positive confidence levels

Business confidence in Scotland rose six points during August to 34%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.

The full easing of lockdown restrictions in Scotland in August was a clear boost for businesses, with overall confidence in the economy also rising by 20 points to 43%.

Companies in Scotland reported marginally lower confidence in their own business prospects month-on-month, down eight points at 25%. When taken alongside their optimism in the economy, this gives a headline confidence reading of 34%.

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

A net balance of 20% of businesses in Scotland expect to increase staff levels over the next year, up seven points on last month.

Overall UK business confidence rose six points in August, reaching 36%, the highest level recorded since May 2018. When asked about their overall trading prospects businesses reported a six-point increase on July’s reading at 34% and firms’ confidence in the economy also increased six points to 39%.

All UK nations and regions had a positive confidence reading in August. The most confident regions were the North West (64%), North East (46%) and London (41%). All bar three areas reported a growth in confidence in August, with the East Midlands (down 10 points to 28%), West Midlands (down three points to 27%) and Yorkshire and Humber (down two points to 26%) reporting marginal falls.

Fraser Sime, regional director for Scotland at Bank of Scotland Commercial Banking, said: “With most of the Covid-19 restrictions easing in August, businesses across Scotland were able to return to normal trading for the first time in 18 months and are feeling optimistic about what this means for the economy.

“With confidence on the up and even more firms are now planning on making new hires, the country is taking great steps towards recovery and growth. We’ll continue to support businesses through the coming months as they aim to capitalise on this positive momentum.”

In sector terms, there was notable strength in sectors benefiting from the further easing of Covid restrictions. Services confidence saw the greatest month-on-month increase, rising by 8 points to 36%, the highest level since January 2018.

Confidence in both manufacturing and construction also picked up (both up 7 points to 40%), led by rises in trading prospects for the year ahead.

The increase in manufacturing confidence came despite ongoing supply disruptions, although the level remains below the high in May. Retail confidence posted a smaller 2-point rise to 34%, remaining below the recent peak in May.

Gareth Oakley, Managing Director for Business Banking, Lloyds Bank, said: “Since the start of the year business confidence has been increasing, and August has been a particularly strong month. Many of the regions have seen significant upticks in confidence and it’s encouraging that Northern Ireland has moved back into positive territory.

“It is clear there is still some level of uncertainty on inflation and the impact of price pressures, but with further boosts to confidence in the services, manufacturing and construction sectors we can be hopeful that demand across all sectors will drive consumption throughout the rest of the year. The last few months of the year will be pivotal to the future of UK economic growth and we remain by the side of businesses as the country continues to reopen.”

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence reaching its highest level in over four years tells a positive story about the country’s economic recovery.

“This confidence is driven by the continued success of the vaccine ollout, the removal of lockdown restrictions and adjustments to self-isolation rules.

“Staff shortages remain a challenge, but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead.”

Business confidence on the rise, says Bank of Scotland

Bank of Scotland’s Business Barometer for April 2018 shows:

Overall confidence for firms in Scotland rose 18 points last month to 30 per cent
Economic optimism in the region stood at 18 per cent, 13 points above last month
Firms’ confidence in their own business prospects was 41 per cent, compared with 18 per cent in March

Business confidence in Scotland rose 18 points during April to reach 30 per cent, according to the latest Business Barometer from the Bank of Scotland. Continue reading Business confidence on the rise, says Bank of Scotland