Business confidence in London rose three points during October to 47%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in London reported higher confidence in their own business prospects month-on-month, up seven points at 56%. When taken alongside their optimism in the economy, down one point to 38%, this gives a headline confidence reading of 47%.
The capital’s businesses identified their top target areas for growth in the next six months as evolving their offer (41%), diversifying into new markets (35%) and investing in their team (28%).
The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.
A net balance of 35% of businesses in the region expect to increase staff levels over the next year, up two points on last month.
Overall UK business confidence rose three points in October from 36% to 39%, and firms’ outlook on the overall UK economy increased four points to 34%. Businesses’ confidence in their own trading prospects also continued the upward trend, rising four points to 45%.
Companies’ hiring intentions reached their highest level since May last year, with 32% of firms intending to increase staff levels over the next 12 months, up six points month-on-month.
Firms in Yorkshire reported the highest levels of business confidence, jumping 12 points to 52% – the highest reading for the region since March 2022. Companies in the South West reported the biggest uptick in business confidence, increasing 26 points month-on-month to 47%.
Following a fall in confidence in September, the retail and service industries both saw an increase in business confidence, with retail business confidence increasing by five points to 37% and services rising seven points to 43%.
Levels are still lower than seen in August, however, when retail business confidence was at 44% and services at 42%. Manufacturing confidence was 36%, unchanged from last month when confidence rose to a three-month high. Construction fell for a second month in a row to 31% (down five points).
Paul Evans, regional director for London at Lloyds Bank Commercial Banking, said: “Another month of above-average confidence will be a boost for the capital’s firms as they head into the busy Christmas season. It’s clear that firms are already laying the groundwork for the next two months to help deliver a strong finish to the year.
“The net balance of firms planning to recruit over the next 12 months points to improving confidence, particularly in their long-term prospects.
But key to turning their ambitions into material growth is implementing and executing a sound business plan. We’ll continue working with firms to forecast and plan investments to ensure a bright end to the year and positive start to 2024.”
Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said: “Business confidence this month reflects a more positive outlook as we head into the important festive period, with trading prospects and economic optimism both at their second highest levels this year. The level also underlines the wider upward trend of steadily rising confidence in 2023.
“If you look at the year in quarterly time periods, confidence has steadily risen from 20% in the first quarter, 26% in the second and in September an average of 27% in the third.
“However, our data shows that firms are still safeguarding their profit margins in response to the possibility of interest rates remaining high, wage increase pressures, and the prospect of higher energy prices again this winter.
“Therefore, businesses will be keeping a keen eye on the forthcoming Autumn Statement and Bank of England policy announcements as they navigate through a challenging economic period ahead.”