Tag: business confidence dips

Scottish business confidence dips but remains positive

Bank of Scotland business barometer – July

  •   Business confidence in Scotland fell 18 points during July to 32%
  • Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (44%), investing in their team (38%) and entering new markets (33%).  
  • Overall, UK business confidence dipped six points to 31%, with nine out of 11 regions and nations reporting a lower confidence level month-on-month

Business confidence in Scotland fell 18 points during July to 32%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. 

Companies in Scotland reported lower confidence in their own business prospects month-on-month, down 11 points at 41%.  When taken alongside their optimism in the economy, down 27 points to 21%, this gives a headline confidence reading of 32%.  

Scottish businesses identified their top target areas for growth in the next six months as evolving their offer (44%), investing in their team (38%) and entering new markets (33%).  
 
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 20 points on last month. 

National picture

Overall, UK business confidence dipped by six points to 31% in July, with nine out of 11 regions and nations reporting a lower confidence reading month-on-month.

Optimism in the economy has also fallen, dropping 11 points to 21%, the lowest levels since February this year.

However, firms remained resilient in their own trading prospects, with 43% of companies expecting business activity to increase over the next 12 months, up one point on last month and reaching a 14-month high.

Despite the fall in overall confidence, levels remain higher than the survey’s long-term average reading of 28% and every UK region and nation reported a positive confidence reading in July.

The North East reported the highest levels of business confidence at 43% (down four points on last month), followed by Yorkshire (down seven points month-on-month) and the West Midlands (up two points month-on-month) both at 38%.

Retail was the only broad sector registering higher confidence (up six points to 35%), mostly reflecting stronger transport services.

The fall in overall business confidence this month was led by the service sector sentiment falling by seven points to 30%. While the fall in confidence was seen broadly across this sector, hospitality firms appeared to be more resilient.

Confidence also was lower in manufacturing (down 16 points to 34%) and construction (down eight points to 31%).

Chris Lawrie, area director for Scotland at Bank of Scotland Commercial Banking, said: “While business confidence may be down this month, it’s brilliant to see that it’s still in positive territory, proof of the resilience of Scottish businesses who are managing headwinds including persistent high inflation.

“Despite the ongoing challenges, those in the country’s hospitality and leisure industry will be reaping the rewards from the uplift in tourism this summer, and those around Edinburgh will be preparing for the Fringe Festival in the hope of a welcome boost in trade.

“With another bank holiday on the horizon, firms will need to manage their working capital closely to ensure they are ready for peaks in demand, and ready to take advantage of any opportunities that arise.”

Paul Gordon, managing director for SME and Mid Corporates at Lloyds Bank Commercial Banking, said: “It’s not surprising that the challenging economic environment is continuing to weigh heavily on businesses and reduce their overall confidence. However, the resilience in their trading prospects, pricing and wage expectations is more encouraging.

“Increased spending in the retail sector is clearly having a positive impact and as we look ahead into the second half of the year, I am sure that businesses will be starting to gear up for the months ahead and ultimately to the busy Christmas season.

“Managing costs, staffing and inventory during this time is crucial to savvy financial planning, and business should not hesitate to reach out for business support should they require it.”

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “The Barometer presents a complex picture for firms this month, with the data showing that trading prospects remain strong with businesses feeling under less pressure by inflation to raise prices.

“However, there is clearly uncertainty about the wider economy and rising interest rates. This may be causing net hiring intentions to moderate slightly. Nevertheless, wages and jobs growth continue to support staff with the current cost of living. 

“However, the sectoral analysis this month shows some positive signs for the retail sector, while there are indications that pent-up demand may be boosting confidence in tourism and travel. As businesses continue to adapt to the economic environment, we expect to see ongoing resilience broadly across all sectors.”

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.”