The North East was the joint most-confident of any UK nation or region in October, according to the latest Business Barometer from Lloyds – maintaining its leading position for a second-month running, despite a slight dip in overall confidence.
While companies in the North East reported no change in confidence in their own business prospects month-on-month (70%), their optimism in the economy dipped 13 points to 54%. Taken together, this gives a headline confidence reading of 62% (vs. 68% in September) – the joint-highest reading of any UK nation or region in October, alongside the West Midlands (62%).
A net balance of 58% of businesses in the North East also expect to increase staff levels over the next year, up four points on last month. Meanwhile, the region’s businesses identified their top target areas for growth over the next six months as entering new markets (46%), evolving their offering, for example by introducing new products and services (40%) and investing in their team, for example through training (34%).
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
National picture
Overall, UK business confidence climbed eight points in October to 50%.
Firms’ optimism in their own trading prospects rose 11 points to 62%, while their confidence in the wider economy climbed six points to 39%.
London (60%) was the second-most confident UK nation or region in October after the North East and West Midlands.
Sector Insights
October saw the manufacturing sector’s confidence increase by 31 points to 62%, indicating stronger momentum in the sector. Retail firms also reported a rise in confidence, with the figure increasing by 13 points to 53%. Construction saw a confidence gain for the first time in five months, increasing 23 points to 58%. However, the service sector saw a decline for a third consecutive month, falling three points to 44%.
Martyn Kendrick, regional director for the North East at Lloyds, said: “While confidence in the North East has seen a slight dip this month, the region has maintained its UK-leading position for a second-month running, reflecting the innovation and resilience inherent to our local business community.
“Local firms continue to set out ambitious growth plans – underpinned by everything from investment in their teams, to deploying new technology. We’ll continue to provide our support to help turn these strategies into reality.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “Business confidence has risen following a fall in September, with trading prospects and economic optimism nearing the levels reported in the summer. Pricing pressures appear to have eased but continue to be driven primarily by general inflation and rising input and staffing costs.
“Over the course of this year, firms have demonstrated their resilience by adapting to challenges, despite higher labour costs, by focusing on hiring and workforce development.”