Lloyds Bank’s Business Barometer for August 2020 shows:
- Overall confidence of firms in the North East fell two points in the past month to -5%
- Firms’ confidence in their own business prospects was -3%, compared with 7% in July
- 59% of North East firms said they could in theory, operate at full capacity while remaining COVID-secure
Business confidence in the North East dipped slightly during August after rising to be the most confident region in the UK during July. Confidence in the region fell two points in August to -5%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the North East reported lower confidence in their business prospects month-on-month at -3%hen taken alongside their views of the economy overall, this gives a headline confidence reading of -5%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When asked about the impact COVID-19 was having on their business, the majority of firms continued to see demand negatively affected during August. 55% experienced a fall in demand for their products and services, down two points on the month before. Meanwhile, 7% experienced an increase in demand, down four points on July.
Almost two fifths (39%) of North East firms surveyed said they weren’t currently using the Job Retention Scheme.
When asked about social distancing measures, more than half (59%) of businesses said they could, in theory, operate at full capacity while remaining COVID-secure, although more than a quarter (27%) said they couldn’t operate fully within the rules.
Of the 52% of businesses reporting disruption to their supply chain during August, 48% expected the situation to improve within six months, while just 4% expected it would take more than 12 months to return to normal levels.
Paul Varley, regional director for the North East at Lloyds Bank Commercial Banking, said: “The North East is one of the most confident regions in the UK, second only to the South East. But the caveat remains that we’re still in a period of historic lows in optimism.
“Nevertheless, despite this month’s marginal dip, it’s encouraging to see confidence largely returning to the region after being absent since before the lockdown in March. We’ll continue to be by the side of businesses across the North East as they look towards economic recovery.”
Overall UK confidence rose eight points during August to -14%. The South East became the first region to register a positive reading since March, after confidence climbed from -31% in July to 1% this month. The South West and Scotland were least confident in August at -25% and -35% respectively.
All four major industry sectors reported confidence at the highest levels since March. Manufacturing saw the sharpest increase of 14 percentage points to -7%, while construction rose 11 percentage points to -11%. The retail sector rose to -8% and services increased to -18%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “With business confidence sitting well below the long-term average, and official data for Q2 confirming the UK re-entered recession, the shape of any economic recovery remains highly uncertain. Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base, which will hopefully continue over the coming months.”