Business confidence in London fell eight points during May to 24%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Companies in the capital reported lower confidence in their own business prospects month-on-month, down 13 points at 18%. When taken alongside their optimism in the economy, down three points to 30%, this gives a headline confidence reading of 24%.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
When it comes to jobs, a net balance of 7% of businesses in the region expect to increase staff levels over the next year, down four points on last month.
Overall UK business confidence rose four points in May to 33%, a fourth consecutive month of growth. The reading comes after non-essential retail and hospitality firms reopened their doors to customers. Businesses reported an increase in optimism about their own trading prospects, up two points month-on-month to 28% and their confidence in the economy grew by six points to 38%.
Firms’ hiring intentions also rebounded to pre-pandemic levels with 14% of UK businesses expecting to make new hires in the next 12 months, the highest reading since February 2020.
All UK regions reported a net positive confidence reading in May, with almost all areas recording an increase in confidence. Yorkshire and the Humber was the most positive region (up 12 points to 44%) followed by the South West (up 12 points to 42%) and the West Midlands (up 10 points to 41%). Wales reported the biggest month-on-month increase (up 18 points to 27%). Three regions, including London, reported small dips in confidence but remained in positive territory. The other two were the North East (down 11 points to 26%) and North West (down five points to 38%).
Mark Amis, regional director for London at Lloyds Bank Commercial Banking, said: “Overall confidence among London firms has risen significantly since the government announced its four-step roadmap out of lockdown, and despite a slight dip in May, businesses confidence is still high.
“However, we know some businesses are still struggling with reduced operational capacity, and this is especially true for the city’s world-famous restaurant and hospitality sectors.
“Whatever the coming weeks and months hold, we will remain by the side of businesses across the capital to help them emerge from the restrictions in as strong a position as possible.”
From a sector perspective, manufacturing reported the sharpest increase in business confidence (up thirteen points to 53%). Construction confidence was up seven points to 35%, and retail gained five points to a four-year high of 44% with the easing of lockdown measures leading to hopes of stronger business conditions. Wider services confidence posted a more modest rise of one point to 26%.
Hann-Ju Ho, Senior Economist, Lloyds Bank Commercial Banking, said: “A fourth consecutive monthly increase in business confidence, and the highest in three years, leaves us hopeful for the UK’s economic recovery. The increase in confidence was buoyed by a further easing of lockdown restrictions and a rise in optimism about the wider economy. While we need to wait and see how the months ahead will unfold, the recent rise in positive outlook is an encouraging sign that firms are emerging from the COVID-19 crisis with renewed resilience and vigour.”