Wales leads the way in business confidence growth

Business confidence in Wales increased by more than anywhere else in the UK during September, up 27 points to 46%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in Wales reported higher confidence in their own business prospects month-on-month, up 26 points at 42%. When taken alongside their optimism in the economy, up 28 points to 50%, this gives a headline confidence reading of 46%.

The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide. This month’s survey was conducted before fuel disruption and ongoing supply chain issues tightened their grip.

A net balance of 24% of businesses in the region expect to increase staff levels over the next year, up 16 points on last month.

Overall UK business confidence rose 10 points in September to 46%, with all regions and nations reporting double-digit confidence levels. The number of businesses planning on hiring new staff more than doubled from 18% to 37% as firms look to increase headcount over the next 12 months. Overall confidence in trading prospects rose by nine points to 43% and firms’ optimism in the economy increased by the same amount to 48%.

All bar three UK regions reported an increase in confidence with Wales (up 27 points to 46%) and Yorkshire and Humber (up 22 points to 48%) reporting the biggest jumps. Firms in the North West (down 17 points to 47%) and East of England (down nine points to 30%) reported falls in confidence but both remained comfortably in positive territory. Businesses in the South East reported no change month on month at 32%.

Amanda Dorel, regional director for Wales at Lloyds Bank Commercial Banking, said: “Wales has been more cautious than other parts of the UK when it comes to easing coronavirus restrictions, but there is a real sense now that businesses are in a much stronger position than they have been since the coronavirus outbreak.

“We hope that this will help them to remain resilient in the face of current challenges including the ongoing fuel disruption and labour and supply chain shortages that are affecting a wide range of industries. Whatever the coming weeks and months bring we’ll continue to be there to support Welsh businesses.”

Confidence increased across the four broad sectors, notably in manufacturing and services. Manufacturing (up nine points to 49%) reached a four-month high, while services gained 11 points to 47%, the highest since early 2017, with particularly strong trading prospects in hospitality and financial & business services. Retail confidence improved by 8 points to a four-month high of 42%, while construction only edged up by 1 point to 41% which was nevertheless a three-year high.

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “It remains encouraging to see a further improvement in business confidence reaching its highest level since April 2017.

“Employment expectations have risen significantly, with more than half of businesses expecting to recruit in the next 12 months. The hope is that the availability of labour will increase to alleviate current staff shortages for many firms, which will help to underpin UK economic growth over the medium term.”