31 Aug East of England business confidence falls in August
Business confidence in the East of England fell 44 points during August to 2% according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the region reported lower confidence in their own business prospects month-on-month, down 41 points at 18%. When taken alongside their optimism in the economy, down 44 points to -11%, this gives a headline confidence reading of 2%.
Despite the fall in optimism during August, a three-month average of local businesses’ confidence scores reveals a more positive picture. The average sits at a net confidence score of 26%, factoring in monthly scores of June, July and August.
The Business Barometer, which questions 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide. The overall ‘balance’ of opinion weighs up the percentage of firms that are positive in outlook against those that are negative, and gives a net balance on a scale of -100 to 100.
When asked about their top target areas for growth in the next six months, firms said evolving their offering (33%), investing in their teams (32%) and diversifying into new markets (25%).
A net balance of 1% of East of England businesses now expect to reduce staff levels over the next year, down 37 points on last month.
Overall UK business confidence fell nine points during August to 16%, its lowest level since March 2021. Firms’ outlook on their future trading prospects was down 32 points to 5%, and their optimism in the wider economy dropped six points to 6%. The net balance of businesses planning to create new jobs also decreased five points to 16%.
While every UK region and nation reported a positive confidence reading in August (except the South East, where confidence dropped 15 points to 0%), only three recorded a month-on-month increase in optimism. The three regions were the North West (up 26 points to 44%), South West (up 12 points to 23%) and Yorkshire (up nine points to 23%), with the North West now the most optimistic region overall.
Dene Jones, regional director for the East of England at Lloyds Bank Commercial Banking, said: “This month’s findings don’t make for pleasant reading, but nor do they come as a great shock. Rapidly rising inflation, steep hikes in interest rates and skills shortages are clearly taking their toll on the region’s firms.
“Mitigating these many challenges will be the number one priority for the East’s businesses over the coming months, and making the most of available funding options and engaging suppliers in an open dialogue are two ways firms can stay resilient and identify new opportunities for growth.”
Business confidence declined across all four sectors in August. Confidence within the retail sector declined the most this month (13%, down 18 points), with the service sector also seeing a significant nine-point decrease (15%). Other sectors saw moderate decreases, with manufacturing down by four points (16%) and construction (26%, a fall of two points), in line with recent trends.
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “Business confidence declined for a third consecutive month as firms continue to face economic challenges in the period ahead and as inflation concerns intensify. Despite edging lower this month, the outlook for both wage and price pressures remains elevated. However, there are some brighter points as the demand for staff remains positive, and firms reported lower concerns about staffing issues and the pandemic.”
