Lloyds Bank’s Business Barometer for August 2018 shows:
• Overall confidence for firms in the North East fell 14 points in the past month to 20 per cent
• Economic optimism in the region stood at 12 per cent, eight points below last month
• Firms’ confidence in their own business prospects was 27 per cent, compared with 48 per cent in July
• The number of businesses expecting to increase their staff levels over the next 12 months rose by 3 points to 24 per cent.
Business confidence in the North East dropped 14 points during August to 20 per cent, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the North East also reported lower confidence in their business prospects at 27 per cent and lower economic optimism at 12 per cent.
Together, this gives an overall confidence of 20 per cent, which is 14 points below last month’s figure of 34 per cent.
Despite this, companies’ hiring intentions showed that a net balance of 24 per cent of businesses in the region expect to hire more staff during the next year, up three points on last month.
Nationally, overall confidence fell six points to 23 per cent as firms’ optimism about the economy dropped eight points to 17 per cent. Businesses’ confidence in their own prospects dropped five points to 29 per cent.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Across the North East, a net balance of three per cent of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity. This compares to July, when a net balance of 9 per cent of firms said Brexit was having a positive effect.
Kelly Green, regional director for the North East at Lloyds Bank Commercial Banking, said: “While it’s disappointing to see North East firms’ confidence dip over the last month, this is a trend that’s reflected across the country.
“Ongoing economic and political uncertainty is making it difficult to plan ahead. However, the uptick in hiring intentions suggests many businesses are already taking steps to ensure that they’re prepared to capitalise on future opportunities.
“As we approach the final quarter of the year, it’s essential that firms across the region continue to seek trusted advice and make targeted investments for growth. As they do, I look forward to seeing confidence blossom in the months to come.”
Businesses in London and the West Midlands showed the most confidence, both at 37 per cent, ahead of the North West (35 per cent).
Firms in the South East were the least confident, with an overall confidence of just eight per cent, 15 points below the national average.
From a sector perspective, firms in the manufacturing sector remained most confident at 38 per cent, but confidence of construction businesses fell sharply by 12 points to 36 per cent, closely followed by consumer services ( 6 points to 22 per cent) and other services ( 6 points to 18 per cent).
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking commented:
“Business confidence was resilient in the first half of the year, but has eased back recently. This reflects changes in perceptions of Brexit risks, which underscores the importance of current EU-UK negotiations.”
The Business Barometer’s measure of overall business confidence is the average of responses about how businesses regard the economic outlook and their own trading prospects.
• The overall ‘balance’ of opinion weighs up the percentage of firms that are positive in outlook against those that are negative. Responses are weighted to reflect the composition of the economy.
• The industrial sector in this report represents mainly manufacturing and construction; the consumer services sector comprises distribution and transport & communications; business & other services consists of financial & business services and the public sector.
• The Business Barometer results provide early signals about UK economic trends. The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BDRC Continental.
• This survey was conducted with around 1,200 companies – including 84 businesses in the North East – with turnover above £1 million between 1st and 16th August 2018.